The potential dangers of eternally projecting exponential increase is clearly demonstrated by the case of John Foley, previous CEO of Peloton.
Peloton’s fitness equipment for home usage saw an enormous surge in request during the Covid-19 crisis, leading to a 400 per cent rise in company shares in 2020 and pushing its worth to a peak of $63 billion.
Foley saw this as just the beginning, confidently telling the Peloton board in October 2020 that he foresees Peloton becoming one of the few companies to reach a valuation of $1 trillion within 15 years.
However, the board members were not persuaded by his prediction and advised him against repeating such inaccurate appraisal citing it as foolish-sounding.
Their reservations proved correct as, since reaching its peak, the value of shares have declined by 97 percent. Once a billionaire, Foley is making headlines after confessing to the New York Post that he has “lost everything” and was forced to liquidate a significant portion of his assets.
Though he stepped down in 2022, the founder of Peloton maintains a hopeful outlook, asserting that the price of shares should be around “$40 or $50″, nearly ten times the current valuation.
Over-optimism can indeed pose a problem in certain situations.
