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Bedrock AI predicted Peloton Interactive ($PTON) stock collapse

Bedrock AI is software that uses AI to read securities filings and predict whether a company’s stock price would collapse based on its written financial disclosures.


Bedrock AI predicted a collapse at Peloton in May 2021. During this time, $PTON’s stock price was over $80.


Since then, Peloton’s stock price has plunged to $11.71 (as of December 12, 2022), a decrease of more than 80%. For context, the S&P 500 went down about 6% during this same timeframe.

 

In addition to Peloton’s high Bedrock AI Risk Score, we also flagged multiple red flags at the company to our subscribers. Never miss red flags like these again, sign up for a trial https://www.bedrock-ai.com/contact-us.

 

Red flags at Peloton $PTON flagged by Bedrock AI in 2021:


Product recall (disclosed in May 2021):


The company issued a product recall in May 2021 for its Tread+ product after the US Consumer Product Safety commission issued a consumer warning in April 2021. Over 125,000 Tread+ treadmills were recalled following the death of a child and dozens of incidents.


Costs associated with Tread+ product recalls totaled about $100M for the year, including $81M in estimated returns and $16M other costs (including write-downs and repairs).


$PTON was subjected to investigations by DOJ, DHS, and SEC related to the Tread+ recall matter.


Internal control red flags (disclosed in August 2021):


Management had identified a material control weakness in its inventory process. The following control processes were deemed ineffective:

  • IT general controls facilitating inventory cycle counts.

  • Lack of global inventory count policy and standard operating procedures for key stakeholders within the supply chain, logistics, and inventory processes.

Its auditor, Ernst & Young, had issued an adverse opinion on the effectiveness of its internal controls.


Our Bedrock team had also highlighted some of these $PTON red flags in a Substack back in 2021:


A few of our algorithmic red flags from 2021 (as shown from Bedrock AI's Dashboard):



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