In the early days of the epidemic, peloton was one of the major workout-home stocks. But since it peaked at more than $ 208.68 ($ 160 USD) at the end of 2020, Peloton’s stock has fallen to pre-covid levels.
Depending on the type of investor you are, you may be willing to load in PTON or abandon it faster than Carrie Bradshaw. But if the company’s new leadership makes you believe the stock can still get a second wind, here’s everything you need to know to buy Peloton stock.
How To Buy Peloton (PTON) Stock
1. Select a broker
If you do not have a brokerage account, you will need to open one to purchase Peloton stock. Look for suppliers with the lowest account minimum and no business fees. If you’re not sure where to start, check out our list of our best online brokers and investment apps.
When reviewing brokers, pay attention to the types of accounts offered by the brokerage. Most have the basics, such as tax-deferred or tax-exempt registered accounts, such as general tax investment accounts and a tax-free savings account (TFSA), a registered retirement savings plan (RRSP), and registered education savings. Plan (RESP). The RRSP is actually recognized as tax-deferred by the IRS, so if you pay US stock a dividend, you don’t have to pay a 15% withholding tax that the IRS charges you as a Canadian (other countries pay 30%).
2. Do your homework
Before investing in any stock, you should do your research. You only want to invest money in companies that have operations, finances, goals and risks that you are comfortable with.
The best resource when doing your research is the annual and quarterly reports of public companies such as the Peloton File with the US Securities and Exchange Commission (SEC). You can find those documents on the company’s investor relations website or by searching the SEC’s database. You can also read third-party analytics from outlets such as Globe Investor, The Motley Fool and Forbes.
3. Decide how much to invest
No matter how much you love Cody Rigsby, you’re probably not ready to sign your entire savings to Peloton. Here’s how you can figure out what you can really do to put it into PTON:
- What is your budget? Once you’ve paid all your bills, do you have enough to retire and set up something for your emergency fund? Once you have covered all three of those bases, you are free to invest the rest, whatever you choose.
- What is your investment strategy? When buying stocks, you can invest large sums or small bits at a time, using a technique called dollar-cost averaging. Dollar-cost averaging reduces the risk you buy when prices are high, and in the long run you can reduce the average amount you pay per share.
- What else is in your investment portfolio? Experts recommend against putting all your money in one company. Before dedicating a large amount of money to Peloton, consider how it fits into your overall portfolio and how it can interact with your other investments.
4. Place the order
Once you decide how much you want to invest, you’re ready to buy a peloton stock – you do it by placing an order in your brokerage. To do so, 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 will probably allow you to place market orders and limit orders. Market orders go away right now — during normal trading hours — at current prices. In contrast, limit orders only pass when the stock reaches the price you specified. Limit orders can only make sense if you expect the stock to experience volatility, and you only want to buy it if the price is a certain amount. Otherwise, when you fill out an order and the order is actually executed, the market order can see significant changes between the price of the stock.
Peloton trades on the Nasdaq Stock Exchange, so you can easily make purchases between 9:30 am and 4:30 pm ET on Monday to Friday. Your broker may give you access to additional pre and post trading hours.
5. Keep the currency conversion fee in mind
If you are buying US stocks with Canadian dollars, your brokerage will usually charge a currency conversion fee of 1% to 4% on the current exchange rate. When you buy and sell stock, they are charged every time you convert a currency.
It is possible to bypass these charges by simply using American currency and buying those US dollars in a US dollar bank account or by operating Norbert’s Gambit.
Norbert’s Gambit is when you buy an interlisted stock or ETF on American and Canadian stock exchanges. You buy Canadian shares of that stock, then you ask your brokerage to “journal over” your Canadian shares to the American list and make them American shares of the same stock. You can then sell your American stock and use US dollars to buy any American stock or ETF you want (including PTON) without converting the currency.
6. Sell your peloton stock
Whether you are a long-term investor or are planning to hold your shares for a few days or weeks, you will eventually need to sell your Peloton stock.
Selling your shares is easy. Enter the trading platform and the number of dollars or dollars you want to sell. As the stock is purchased, you may have the option to sell the stock through market orders or limit orders. Again, your preference is to expect how volatile the stock is or if you want to reach a certain limit before you sell.
If you are expecting a significant return, you may want to talk to a tax professional to outline ways to manage your capital gains tax. Fortunately, you only have to pay a capital gain of 50% of your profits to the CRA and not the IRS.
You only pay the IRS tax in three general cases:
- Your stock pays dividends – You have to pay a 15% withholding tax until you submit the Form W-8 BEN with your brokerage. If you do not complete this form, the withholding tax is 30%.
- You have at least a 5% stake in American Corporation that benefits from American real estate – You will pay capital gain in this instance as long as it is the primary property of the American Real Estate Corporation.
- You make $ 5 million or more in your US investment – In this case, your estate is subject to IRS estate taxes.
Other ways to invest in Peloton
Investing in personal stocks such as peloton can be attractive because they allow you to put your money behind the brand name and benefit from any growth it experiences. But as PTON’s recent performance confirms, this is a risky strategy as individual stocks rarely experience wild price fluctuations.
That is why experts recommend that most people invest in low-cost, diversified mutual funds and exchange-traded funds (ETFs). Fortunately, PTON is easy to find in many funds. According to ETF.com, over 100 ETFs have covered it.
On average, these ETFs allocate 0.33% of their holdings to Peloton, but for those looking for further exposure, the company makes up about 4% of some funds.