Thread by @heymaxkoh

5 investing lessons I've learnt from the 30% $PTON stock price drop

This was a terrible earnings.

Management guided revenue lower because of:

- demand headwinds
- lower site and store traffic
- more people buying the cheaper bike

So here's my personal reflections:

1. Know your time frame

IMO, there are better places to put your $$ in the short run.

So I won't add new cash to it.

Because given the stagnant revenue, the stock could likely stay flat.

There are better places to put your $$.

That said, I'll still be holding on. Why?

1b. Mainly because I personally like to give a company 3 years to execute.

That's just a rule of mine.

These growth companies are usually creating a new industry.

So execution is tough and takes time.

I like to give them wiggle room.

Because I see myself as part owner.

2. Know WHY you're invested

Though I give them room to wiggle...

I watch closely.

I invested in PTON for 2 reasons:

1. Huge customer love

2. Great value prop to the customer compared to spin class

These 2 reasons still hold true for me.

So I have no reason to exit yet.

3. Importance of position sizing

I'm lucky. I sized my positions well.

PTON is not the only position I own, so I'm still good.

I don't use any leverage or options.

So I sleep soundly.

It's dragged down my overall returns for sure.

But my YTD returns are still >55%.

4. Take time to understand management

A reason I was willing to make PTON a bigger bet in my portfolio?

John Foley.

Seeing the multiple rejections he went through in the early days, he's a fighter.

This gives me more confidence.

But I will continue observing closely.

5. Write a thesis

I'm glad I took the extra hassle to write a thesis before I invested.

Times like these when hell breaks loose, it's hard to stay rational.

My thesis keeps me grounded.

Helps me ask the right questions.

Otherwise I would be dragged in a million directions.

Some final thoughts:

Objectively speaking, I'm concerned about the lower guidance.

Because it tells me management knows there are gonna be headwinds.

I'm still amazed at the tread NPS of 89.

But I'm cautious of what 2022 holds for them.

So I'm watching it closely.

For entertainment:

I'm attaching my thread on $PTON that went viral last week:

Read the replies section.

They just came in fresh after the stock drop.

Some of their remarks are snarky but hilarious.

I still love them though.

They keep me humble.

https://twitter.com/heymaxkoh/status/1454085789902512145?s=20

If you like this, follow me at @heymaxkoh

I share my journey on:

- How I attained financial freedom before age 30

- My investing strategies and principles

- How I research companies and stocks