Let’s Talk “Growth” and Insane Valuations

Quite a few stocks are currently in my “Utter Crap” portfolio that I follow on Yahoo Finance.  I’m going to point out one here and just make some super basic, dumb observations.  The particular issuance I’m talking about today is good ol’ Peleton (PTON).  So, PTON is a company that is a leader in “interactive fitness products”.  When I think of them, I think of their TV commercials which show their slick bikes with Internet connectivity.  Sweet.

Here they are, a leader in the field – perhaps THE leader.  But, a quick look at the financials on Yahoo Finance shows negative operating cash flow.  This kind of thing always blows my mind.  I mean, if they’re not able to generate positive cash flow when they are the market leader, how are they going to do so when competition gets fierce?

Enterprise value today:  $31B.  Operating cash flow:  -$240m.  Seems like an easy pass at these levels for me.  I’d be a buyer at around a P/S ratio of MAYBE 1.5 putting it at $6.15B.  But I think there will be other opportunities at that point.

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