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Is Peloton overvalued?

February 4, 2021, 11:46 AM UTC

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Good morning.

I threw in the towel and joined the Peloton pack this week. Well, that’s not quite right. I actually threw in the towel in November, ordering and paying for my bike then. But it didn’t arrive until this week.

That long wait is indicative of the wild ride this stationary bicycle company has been on since it went public in September 2019. The pandemic caused orders and revenues to soar, hitting $758 million in last year’s third quarter and turning the company to profit.

But the share price is where the real action has been. The stock’s IPO debuted at $27 a share, then once the pandemic hit, started a climb that looks like a ride up Mount Ventoux, today trading at almost $150 a share. That gives the company a market cap of a stunning $43 billion dollars—making it as valuable as the Ford Motor Company.

Now, to be clear, I like my new bike. And with the house buried in two feet of snow, it’s nice to have an exercise option that doesn’t involve going outside. But $43 billion? For a stationary bicycle and an app?

That’s the issue Fortune’s Robert Hackett explores in a story out this morning. One issue, he says, is whether Peloton can hold its lead over competitors, which are multiplying daily—including Apple, which introduced Fitness + in December, and Lululemon, which paid a half-billion dollars to buy Mirror. A second is what happens when the pandemic passes and the gyms reopen. And a third is just basic human laziness. How many people really want to pay this much to sweat? You can read Hackett’s excellent story here.

Ultimately, I take Peloton’s valuation as just more evidence that the stock market has lost its moorings. There is too much money chasing too few investments. And as long as that remains true, investors will continue to take companies like Peloton, Tesla, GameStock or whatever else captures the zeitgeist of the moment for wild rides.

News below.

Alan Murray
@alansmurray

alan.murray@fortune.com

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This edition of CEO Daily was edited by David Meyer.