Exercise equipment manufacturer Peloton debuted on the Nasdaq Composite at $27 per share. Jim Cramer recommends starting a position at least $4 below the open price.
His concern is that Peloton has strong growth but lacks earnings in a market where money managers now want to see a profit.
Peloton's revenue grew 110% to $915 million in fiscal 2019 ending June, up from 99% growth in fiscal 2018. However, revenue costs for both its hardware and service businesses were up 110% and 127%, respectively, he pointed out. Outside of the business model, Cramer is critical of Peloton's dual-class share structure that gives public shareholders little voting rights. Another thing to worry about is lawsuits from music publishers who say that Peloton is using music from artists without licensing the content, he added.
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