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Asymmetric Investing Spotlight: Peloton $PTON
The full write-up is below, but I don't think investors are appreciating the potential of Peloton.
Unrivaled Brand
High Operating Leverage
Winner-Take-All Market...this one isn't obvious until you look at recent results from Beachbody, Nautilus, Soul Cycle, etc.
TL;DR:
Think Netflix of fitness - limitless content, 24/7, everywhere
Peloton Bikes? A Trojan Horse to become a digital fitness company.
You want to invest in companies whose customers act cult-like (Apple, Tesla). Peloton is definitely cult-like.
Asymmetric Investing
Asymmetric Investing Spotlight: Peloton
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Speaking as a former $PTON shareholder I think the Peloton brand has been severely eroded as a result of management actions over the past couple of years. Handling of recalls and third party discounted selling on Amazon being the main architects of this downfall.
@wolfofharcourt If you thought Peloton would always be a premium brand like it was in 2018, yes that's true. But there's nothing about their subscriber trends (yet) that indicates users are leaving the platform. In other words, users seem happy.
Naturally, Peloton has to be "less premium" to have a bigger user base. But a bigger user base is how it makes money long-term.
@travishoium that was my thesis - the Apple of connected fitness. Apple devices are more expensive compared to competitors. This premium brand has not stopped them in any way creating a huge user base.
How sustainable is Peloton's growth given the increasing competition in the home fitness market?
I find that there’s so many alternatives to choose from as a customer wanting a fitness subscription - Alo Moves, Nike fitness, Shreddy and Stravva.
@joeyhirendernath That's a good question. I spent a lot of time digging into this and the financial position of a lot of competitors is pretty terrible and their user trends are bad. Beachbody, Soul Cycle, Nautilus, etc are in bad shape and don't have scale. Nike is obviously a different story as is Apple. But I think a lot of these companies will fall away over time.
What stood out to me was Peloton ADDING subscribers as competitors were LOSING subs. That's something.
Strategically, I think streaming TV is a good comparison. Yes, there are 50 streaming services today, but only a couple actually make money. In time, the others will give up/go bankrupt. There's probably only 3-5 meaningful streaming services 5 years from now.
Fitness may be even smaller. There may only be room for 1 winner. That's not certain yet, but I do think it's likely given the impact of SaaS-like economics in this business. If that's right and Peloton is the winner, that's a big business.
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