According to Business Insider dated December 12, 2020, Peloton (PTON) would trade as part of the Nasdaq 100 Index on December 21, 2020. As noted in the article:
“A 312% year-to-date rally in Peloton has helped the connected fitness equipment maker join the ranks of its large-cap tech peers: inclusion in the Nasdaq 100 index.”
Turns out, that addition to the index was the beginning of the end for PTON’s stock price.
Since the point of an index is to act as a barometer, we’re well past the time and could only hope they would add stocks as value investors rather than speculators. Unfortunately, as we’ve noted in the past, the handlers of indexes generally add and drop companies to indexes like traders rather than value investors.
After a run-up of over +312%, you’d think the index managers would have learned to pace their enthusiasm for additions to the Index. The same Business Insider article introduced the five other companies that were being added to the Nasdaq 100.
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American Electric Power (AEP)
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Marvell Technology (MRVL)
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Match Group (MTCH)
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Okta Inc. (OKTA)
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Atlassian Corp. (TEAM)
Below is the 2 year performance of each stock:
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PTON –10%
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AEP –10%
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MRVL +177%
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MTCH +38
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OKTA +54%
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TEAM +100.87%
The question that we like to ask ourselves is this, “After two years, why is AEP performing as if it were PTON?”