Peloton Interactive Inc (NASDAQ:PTON) is down nearly 75% over the last year, but the stock is surging by more than 30% Tuesday amid continued acquisition speculation and a newly-announced CEO transition. So, what gives?
"I think most of what you're seeing is a short squeeze," Ritholtz Wealth Management's Josh Brown said Tuesday on CNBC's "Fast Money Halftime Report," citing elevated short interest numbers.
12.87% of Peloton's total float is currently sold short, according to data from Benzinga Pro.
At the market close Friday, Peloton short sellers were already sitting on about $250 million in losses, according to Brown. "And then you get this big spike today," he said.
"I think this is much more indicative of people just coming out of this thing at a small loss or maybe a big gain if they were long-term investment shorts."
You Ask, We Analyze: Why Going Short Peloton Stock Is Risky As Amazon M&A Rumors Surface
Brown doesn't think institutional investors are turning bullish on Peloton just because "one of the worst managed companies in the market" announced a CEO transition.
What's Next: Anyone who remains long the stock after today is betting that Amazon.com Inc (NASDAQ:AMZN) or Nike Inc (NYSE:NKE) will buy Peloton, he said.
"I don't believe the rumors that Apple has any interest," Brown said. "They don't do deals."
PTON Price Action: Peloton has traded as low as $22.81 and as high as $155.52 over a 52-week period.
The stock was up 30.2% at $38.73 Tuesday afternoon.
Photo: courtesy of Peloton.
