The architect of one of last year's biggest meme-stock rallies says Peloton is his newest bullish target

• Eric Jackson, the hedge fund manager who sent Opendoor stock surging last summer, has a new bullish bet.
• He said on Friday that he's long beaten-down Peloton stock.
• A hero among retail traders, Jackson is bullish on a turnaround for the exercise equipment maker.

The hedge fund manager who helped engineer the Opendoor stock rally last summer is back with a new bullish target. On Friday, Eric Jackson, the founder of of EMJ Capital, said he is betting big on a pandemic-era darling that has struggled in post-COVID era.

Peloton Interactive surged as the world went into lockdown in 2020, rising alongside companies such as Zoom, Netflix, Teledoc, and others that emerged as lockdown winners.

Consumers needed both community and ways to work out at home. Peloton provided both, and the stock soared while traditional gyms remained shuttered.

Now, the trendy fitness stock is down 96% from its 2021 peak, but Jackson sees a shift he thinks will benefit Peloton.

"At ~$4, Peloton is generating ~$300M+ in free cash flow, has over $1B in cash, and has seen meaningful insider buying on the open market," he told Business Insider. "That's not a 'meme' setup — that's a situation where the market is still pricing the company based on its prior narrative rather than its current financial reality."

Jackson revealed his long bet on Peloton in a Friday X thread,
condensing a more detailed Substack article. He wrote that the market is mispricing the stock.

In Jackson's view, the Peloton growth playbook is the same as companies like Chewy and Roku. Hardware leads to subscription growth, which leads to a higher cash flow. He added that while the market is focused on Peloton's falling revenue, it is missing both churn and cost structure improvements, as wells as free cash flow growth.

Jackson has rejected the term "meme stock" to describe the Opendoor rally. He maintains this perspective about Peloton, stating that it often describes who owns a stock, not its underlying fundamentals.

"Peloton definitely traded like a meme stock during the COVID period — retail ownership was high, narrative drove price, and the valuation disconnected from fundamentals," he said. "That part is fair. What I'm focused on now is different."

How high does Jackson think Peloton stock can go? His bullish thesis has it rising past $16 per share, an increase of about 300%, while the price target in his best-case scenario is $40 or more.

"It's that it's transitioning out of that phase — from a narrative-driven asset to a fundamentals-driven turnaround — and the market hasn't fully caught up yet," he stated. "That gap is what I'm underwriting."