Trending Assets
Top investors this month
Trending Assets
Top investors this month
$PTON - Market Overreaction, Time to Buy Cheap
In November 2020, when Peloton was trading at $125 a share, I wrote a piece suggesting that Peloton was incredibly overvalued and in 5 years time it should trade closer to $90. The company had pulled forward much of its growth due a favorable backdrop brought in by COVID, and once growth collapsed as gyms re-opened, multiples would come crumbling down. This is exactly what happened this past week, and Peloton's stock today trades at ~$50. Given this strong market correction, I actually think now is a good time to buy Peloton. There are still some things to love about the company, including:
- Leading brand and "creator" of the at-home connected fitness category
- Hypergrowth at scale, with the company reaching $4B in revenue in September LTM, growing >70% YoY
- Large and loyal (~90% retention for a consumer business) subscriber base creates strong network effects around social fitness
- Large subscriber base to spread new content creation costs over, enabling Peloton have a competitive cost advantage when producing content (i.e. the Netflix advantage)
See the link to a longer memo which details my analysis of Peloton. Of course any reactions / feedback are welcome here!
Google Docs
Peloton Investment Memo - November 2020.pdf
Already have an account?