We’re adding Peloton to our Position Monitor as a Best Idea Short. PTON carries a valuation that we think defies both logic and math. The company’s product portfolio continues to expand beyond the core competencies of the company and outside of the successful engaging experience of streaming home spinning classes. We think that will prove to be a huge detriment to margins over the long term. The CFO’s own key metrics show that the current strategy is built only to add subs/revenue while growing the “TAM” for overly optimistic investors with no regard for the profit profile or return on capital. Simply put the company’s planned future scale won’t be there, and with much less of the cost structure being leverageable than the company is signaling, equity value is being drastically over estimated.
With the extensive marketing and the buzz in the media around the product, we think the brand is hitting peak attention and awareness. The selling period of this October through January for PTON will likely be the best the company has ever seen. This will mean 1 or 2 more quarters of good top line metrics, but that will also mean a peak adoption rate, and rapid expansion with a much less sticky and lower quality customer, which will lead to significant slowdowns in growth in 6-12 months and accelerating customer churn to new highs.
Some key topics of our Black Book will include:
1. The real size of the addressable market for Peloton’s premium product offering, including insights from our own consumer survey.
2. The rapidly building competition and the risk of Peloton’s narrow/exclusive brand identity.
3. Peloton’s unique cost structure and the leverage opportunities.
4. Timing considerations of when rate of change should inflect, as well as trading considerations like the lockup coming on March 24.
5. What we think Peloton is ultimately worth, and where it settles as a player in the exercise/fitness industry.
Call Details:
Date/Time: Wednesday Dec 18, 2019 2PM ET Add to Your Calendar CLICK HERE
Toll Free:
Toll:
UK: 0
Confirmation Number: 13697154
Live Video Link: Will be provided prior to call.
