• That implies the stock will plummet 86% from Monday's close of $34.77.
  • Citron argued that the losses will come amid "intense" competition that's continuing to mount.
  • Shares of Peloton fell as much as 9.1% Tuesday.
  • Watch Peloton trade live on Markets Insider .

After an ill-received holiday ad weighed on Peloton's shares in early December, a notorious short-seller says they have much further to fall.

Citron Research , which is run by famed short-seller Andrew Left , gave the company a $5 price target for 2020. That implies the stock will plummet 86% from Monday's close of $34.77. Shares of Peloton fell as much as 9.1% on Tuesday.

While Peloton has enjoyed a first-mover advantage, the "lack of differentiation of its bike has finally caught up to it as the competition is not only making virtually identical exercise bikes but ones that are both more affordable and functional," Citron said in the report .

Second movers have started to create better bikes with features Peloton doesn't offer, Citron wrote. These include swivel screens that allow mat exercises, open platforms that allow users to watch TV or Netflix, and iPad attachments, according to the note. Peloton's hardware hasn't had a meaningful change since 2014, Citron said.

Competitors have also bested Peloton by "expanding their digitally integrated home fitness hardware offerings to new segments like Mirror, Tonal, boxing, rowing, etc," Citron wrote.

Citron argued that Peloton rose to fame by spending nearly $600 million in marketing over the last three years to appeal to the "high-income low hanging fruit while competition was low."

But now, competition is so intense that some companies are offering free exercise bikes with a digital subscription, according to the report.

"Peloton's glory days of hardware sales are in the rear-view mirror," Citron wrote. Going forward, the company will "inevitably compete with Amazon" and lower-priced alternatives if it wants to meet consensus expectations, according to Citron.

Prior to Tuesday's sell-off, Peloton was up roughly 20% from its September IPO price, despite its recent advertising debacle.

Left and his colleagues at Citron have earned the respect of fellow investors and gained the ability to move a stock with a single report through a strong track record.

Perhaps Left's greatest success came in 2015 when he was influential in exposing fraudulent activities at Valeant Pharmaceuticals, which he branded the " pharmaceutical Enron ."

He initially wrote a report arguing the company was using phony transactions to pad drug sales. He followed up with a report centered on the pharmaceutical distribution Philidor RX. Valeant went on to lose 90% of its value from the time of Left's initial publication.

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