How to Buy Peloton Stock (PTON) – Forbes Advisor
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At the start of the pandemic, Peloton was one of the main home training stocks. But since hitting a high of over $160 at the end of 2020, Peloton’s stock has fallen to pre-Covid levels.
Depending on the type of investor you are, you might be ready to load on PTON or drop her faster than Carrie Bradshaw. But if the company’s new management has you thinking the stock could still get a second wind, here’s everything you need to know about buying Peloton stock.
How to Buy Peloton Stock (PTON)
1. Choose a broker
If you don’t have a brokerage account, you’ll need to open one to buy Peloton shares. Look for a provider that has low account minimums and no trading fees. If you’re not sure where to start, check out our list of the best online brokers and investing apps.
When reviewing brokers, pay attention to the types of accounts offered by the brokerage. While most will have basics like normal taxable investment accounts as well as Individual Retirement Accounts (IRAs), startup brokerages tend to run out of 529 accounts to save for education expenses.
2. Do your homework
Before investing in a stock, you need to do your research. You only want to invest money in businesses whose operations, finances, goals, and risks are right for you.
A good resource when doing your research is the annual and quarterly reports that public companies like Peloton file with the United States Securities and Exchange Commission (SEC). You can find these documents on the company’s investor relations website or by searching the SEC database.
3. Determine how much to invest
You’re probably not ready to hand over all your life savings to Peloton, no matter how much you love Cody Rigsby. Here’s how you can figure out what you can really afford to invest in PTON:
- What is your budget ? Once you’ve paid all your bills, do you have enough to put aside for retirement and your emergency fund? Once you’ve covered these three basics, you’re free to invest the rest as you see fit.
- What is your investment strategy? When buying stocks, you can invest a large amount all at once or invest small amounts slowly over time through a strategy called cost averaging. Averaging reduces the risk that you will buy a lot when prices are high and can also lower the average amount you pay per share over the long term.
- What else is in your investment portfolio? Experts recommend not putting all your money into one company. Before committing a large sum of money to Peloton, consider how it fits into your overall portfolio and how it may interact with your other investments.
4. Place an order
Once you have decided how much to invest, you are ready to buy Peloton shares. To do this, place an order with your brokerage. To do this, simply log into your account and enter Peloton’s ticker symbol – PTON – and the number of shares you want to buy or the dollar amount you want to invest.
Your brokerage probably allows you to place both market orders and limit orders. Market orders are executed immediately, provided it is during normal trading hours, at the current price. In contrast, limit orders are executed only when the stock reaches a price you specify. Limit orders can make sense if you expect the stock to experience volatility and only want to buy if the price is a certain amount. Otherwise, a market order could see substantial changes between the stock price when you fill the order and when the order is actually enacted.
Since Peloton is listed on the Nasdaq stock exchange, you can most easily shop between 9:30 a.m. and 4:30 p.m. ET, Monday through Friday. Your broker may also give you access to additional trading hours before and after market.
5. Sell Your Platoon Stock
Whether you are a long-term investor or plan to hold your shares for a few days or weeks, you will eventually need to sell your Peloton shares.
Selling your shares is easy. Simply enter the trading platform and enter the number of shares or dollar amount you wish to sell. As with buying stocks, you can have the choice of selling stocks via market orders or limit orders. Again, your preference will likely depend on how volatile you expect the stock to be or whether you want it to reach a certain threshold before selling.
If you expect to receive large profits, you may want to speak with a tax professional to develop strategies for managing your capital gains taxes.
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Other ways to invest in Peloton
Investing in individual stocks like Peloton can be attractive because they allow you to put your money behind a brand and benefit from any growth it experiences. But as PTON’s recent performance attests, this can be a risky strategy as individual stocks often experience wild price swings.
That’s why experts recommend most people invest in diversified mutual funds and low-cost exchange-traded funds (ETFs). Fortunately, it is easy to find PTONs in many funds. According to ETF.com, 100 ETFs include it in their offering.
On average, these ETFs allocate 0.33% of their holdings to Peloton, but for those looking for even more exposure, the company makes up almost 4% of some funds.