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menellinde t1_j5dqxk3 wrote

>Pandemic stocks, such as Peloton and Robinhood, soared and crashed.

To my knowledge didn't Peloton crash because some kids died and Robinhood crashed because they basically hit the panic button for a big bank that was going under due to the gamestop thing?

I feel like both of these were FAFO moments and had nothing to do with the pandemic

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inner-peace t1_j5eosix wrote

Pelton drastically over estimated demand in early pandemic and over produced inventory. Additionally could not deal with increased labor costs specifically related to product delivery. The bad press didn't help but there were serious fundamental issues with the business model and handling of pandemic demand surge.

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glacialOwl t1_j5em1h6 wrote

You are right but, you see, this is the internet and it doesn’t always work according to what’s true :(

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rulesforrebels t1_j5ga72v wrote

And because people were only buying overpriced bikes with iPad attached because gyms were closed and they were stuck at home and bored

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DeezNeezuts t1_j5f432e wrote

Peloton ruined their customer base by charging for basic services on an already premium product.

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Bangkok_Dangeresque t1_j5ha5v2 wrote

Peloton had a huge surge in sales during the pandemic. But they struggled to stock enough inventory to fill orders, leading to long waits. In the meantime, they made bets into expanding into a whole bunch of different markets that compared to the growth they were promising wall street; app-only subscriptions without the equipment, music festivals/collaborations, hotels and gyms, and apparel/lifestyle brands, among other things.

As things started to re-open, they got hit with a high volume of returns, cancelled subscriptions, and the treadmill recall JUST as their production had finally caught up. They were stuck with inventory that no one wanted, and a lot their expansion bets fell flat. In their June '22 results, compared to the year prior their revenue fell by 10% while their costs went up by 40%. Within 6 months their stock was trading -75% from its pandemic peak.

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Robinhood's initial growth was a right-place-right-time kind of thing. They were one of the few fintech companies that were making a bet on commission-free retail investing, aimed at new/small investors, which they called "democratizing". But because regular trading was free, they earned their revenue by charging fees on more exotic transactions, like options, IPOs, crypto, futures, margin, and other things the average person couldn't really explain if asked to write a one-page essay about it.

Nonetheless user growth was rapid. In Q1 2021, they had something like 18 million users. By Q2 it was 22.5 million. As they explained in their prospectus, there was extraordinary growth in retail investing. A combination of the crypto bubble, meme stocks, bored people working at home hoping to turn day-trading into a hobby, and spike in savings from lifestyle shifts and pandemic relief funds. 40% of their revenue was from options trading. Another 20% from crypto.

Hoping to capitalize on this growth, they went IPO. In their annual reports, they say their chief competitive assets are "Creative Product Design", "Brand", and "Scale". But investors saw the writing on the wall - either the retail craze would slow down on its own, or anyone else could come along and build a good app targeted towards retail. Their stock price fell ~10% on its first day of trading. Their brand took a hit following accusations on order flow and transaction limits related to GME. Today, it's also about -75% down from the initial price.

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start_select t1_j5f50ae wrote

TBF Robinhood takes all the blame when Fidelity, Schwab, and just about every other broker also halted trading on GameStop.

They were overextending themselves, but they weren’t the only ones doing it. And trading is halted on out of control stocks all the time. There actually wasn’t that much novelty to the situation besides Reddit brigades thinking they were taking on hedge funds.

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Revolutionary_Lie539 t1_j5f684j wrote

Wrong. Fidelity did not cancel their buy button.. Im a client.

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start_select t1_j5fk6le wrote

Fidelity didnt completely restrict trades on GME, but they did increase margin restrictions on it. Almost every brokerage reacted in one way or another.

Iirc Robinhood, Webull, and IBKR were the main ones that straight up halted all trades. Schwab and TD Ameritrade were restricting volume and margin requirements.

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