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Peloton: "Unwelcome Surprises"

"The Peloton story of late has been dominated by the bad news. It’s a long list which includes stalled CF subscriber growth, significant losses in the hardware business (FY23 product sales of ~$1.1 billion, down ~$2 billion from FY21), excess inventories, the Bike seat post recall (which has led to customer replacement requests on ~750,000 bikes), an unproven digital app strategy, and financial leverage. All-in, Mr. Market has clearly had enough: at $5.1 per share, the stock price has declined ~97% from where it traded at the end of 2020. The company’s current market cap is equal to ~1x sales for the subscription business (which has ~67% gross margins). Amidst significant uncertainty, is Peloton an attractive risk / reward here for long-term investors?"

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thescienceofhitting.com
Peloton: "Unwelcome Surprises"
From “Turnarounds Are Hard Work” (March 2023): “In summary, Peloton experienced massive tailwinds during the pandemic, but they proved fleeting. They got caught offsides when demand fell off a cliff, with some of prior management’s decisions making today’s problems much worse than they would’ve been otherwise (‘they always had this blind optimism’)…

Benjamin Tan's avatar
The underdog in me wishes to root for their comeback, but the more realistic side of my thinking would rather put my money in some other company in the lifestyle/retail space ( $LULU $NKE ) that does not face the kind of existential risk that $PTON does
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