Peloton Interactive, Inc. (NASDAQ: PTON) announced a partnership with TikTok yesterday…
And while it might sound like just another fluffy press release by an almost penny stock company — I think it could have legs…
Maybe not the news, but the company in general.
It has some things going for it. And it might offer a strategy you want to try…
Here’s my take on why I think PTON would make a great merger target, how you could trade it if it was, and what I think about a potential play right now…
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Could PTON Be a Merger Target?
I’ve never liked this strategy personally, but it doesn’t mean it’s not valid…
There are a million ways to trade in the market, and this is one of them…
In my morning webinar yesterday I explained it to members … the idea behind a takeover arbitrage.
It involves buying shares of two companies that are set to merge.
Now, PTON doesn’t have merger news yet … But I’m getting to why I think it’d be a good target…
In my opinion, PTON is the number one takeover arbitrage stock of 2024.
The company is run terribly — it might be run by the dumbest people in business.
But they have an amazing product.
To compare PTON to a real estate deal — it’s like the most terrible, run-down fixer-upper in the hottest, best neighborhood in the country.
Those deals don’t come around very often, so you have to be patient…
But think about if Apple Inc. (NASDAQ: AAPL), Alphabet Inc. (NASDAQ: GOOGL), or Meta Platforms, Inc. (NASDAQ: META) bought the company…
And integrated workouts with Apple watch, phones, social media, or even Meta’s VR headsets.
These big companies have a ton of cash — buying PTON would be like $20 to you and me.
And it might not be that far off…
Right now I’m speculating … But I do have a Peloton bike and I love it.
But we have to wait for some merger news for that play.
Until then, here’s what I think about a PTON trade after the TikTok news…
The stock rejected right around the Oracle resistance level of $6.32…
There’s also resistance on the daily chart around $6.50 to $6.60.
So I would wait to enter this stock on a multi-month breakout over those levels. From there it could retest the recent highs around $10.
PTON chart: 6-month, daily candle — courtesy of StocksToTrade.com
It’s a beaten-down chart so it has the potential to run if volume keeps up and shorts get squeezed.
But don’t forget about all the low-float squeezers we’re seeing right now.
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Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade