Short, Short, Peloton. It is Useless!!!!!!!!!!
Peloton is the most useless company to ever have had a surge in popularity over the last 2/3 years. It serves as a "signaling effect" (for those who are status conscious), and is better off being in the graveyard. The CEO might have resigned, and there have been job cuts that have been announced, but despite that, there is still a lot to dislike about this company (strategy and operations that is).
1. They are selling a commodity item. At most people spend one hour on a treadmill or bike. Why would one be shelling out ~2K on a "tech" treadmill or a bike (whatever the tech angle here is lol) when I can get the same item for $200/$300 on either Amazon or Walmart. Their prices will have to come down so massively to win any significant market share, doing the math is a futile exercise. Whenever that happens though, their operating loss will widen further. This doesn't factor in your leverage levels, which are already UNSUSTAINABLE to begin with
2. Related to point #1, their capital allocation policies are so messed up -- working capital out of whack, they are bloated on inventories as the media is on covid-related news. Eventually one dumps these inventories at significant mark-downs as folks return to the office, and their losses widen further
3. They have limited ability to weather supply chain shocks. Their connected fitness segment represents ~70%+ of your revenue and ~12% gross margin, and as they state in their 10Q: "the components that go into the manufacturing of our Connected Fitness Products are sourced from a limited number of third-party suppliers, and some of these components are provided by a single supply". Sounds great, they got my full confidence there. 4. Special shout out to the lawsuit that they have going on with lululemon, both don't really have a moat in my opinion, and maybe that's why they are arguing it out in court, but unlike Peloton, Lululemon still has some established operating history and deserves to be around. Lululemon would have a better chance of winning here. Now with the way Peloton fired its employees, I am wondering if they get sued by some disgruntled employees. A lot to bite for some company already not being run optimally 5. There is nothing “ESG”-esque about their business, other than folks (high on BMI index) breaking sweat on it and hopefully that leads to lower insurance payout claims. But they say they are ESG-worthy to get a valuation re-rating. Be wary of such fraudos
6. They want to start this "Artist Series Boxer" program. What a spectacular waste of cash-flow and resources yet again. I just need to hoist my tablet somehow on my bike/treadmill and then stream on that device for the 30 minutes (or an hour) that I'd be using Peloton for. Not sure what value this brings to their platform other than a lot of marketing / customer acquisition costs. But they're going to go ahead and do this and squander shareholders' money Spread the word, Peloton is a "Shit-ton" ;) I have no position in this company nor have I ever had any. This is a proprietary idea.
They are preparing to get bought out. That’s why they are trying to increase margins by cutting costs, laying people off, and reducing compensation for executives
Posting this after the stock is down like 300% lol
I've been on them for a while
How can a stock go down more than 100%?
It’s a joke/hyperbole, intern
Bought my wife one during peak Covid she used it once still paying the subscription.
I have no idea who are these jokers giving me MS. If my wife wanted one, I'd grudgingly get her one. lol But as far as the business goes, it's stupid and the fair value should be close to 0. Poor Capital structure and bad operating model.
I read the CEO interview from 19th Feb on dealbook. CEO obviously has an impressive background, but it is irrelevant to peloton. It’s like putting a former apple / Amazon CEO as CEO of peloton just because of super minor overlaps in the business model (Amazon music that people can play while running, Apple Watch that tells you how many steps you’ve run). Someone from Nordic or Canadian Tire would have been better suited.
There is nothing “tech” about peloton IMO. They want to charge 39 dollars per month for a subscription, that’s 4x more than Netflix and I’m willing to wager people on average are spending more time on Netflix than they are on treadmills / bike on a weekly or monthly basis. MOST people hit the gym twice or thrice a week, and no one spends more than 30 mins on either equipment (treadmill or bike). That’s like 90 minutes in total, you can easily consume 2 to 3 hours of Netflix on a weekly basis.
The social aspect inherent from visiting the gym or other activities that you can do there (sauna, squash, swimming, badminton etc) are obv missing from peloton ‘s product offering. As I said, a perfect substitute to this is just any regular bike / treadmill with a TV in front from where you can stream videos. Who has the time or can be social with other people when you’re on a bike / treadmill. Just watching others through a screen or knowing whose online doesn’t provide the same kind of motivation as it would by going to the gym physically and seeing other people sweat in real time.
My issue with your post is that you’re saying this after the stock has already crashed. It’s kind of like when Jim Cramer gets on cnbc and says Facebook is a buy after it posts good earnings, but then downgraded Facebook to a sell after the stock already crashes. You’re not wrong in your post, it’s just that it seems a little too late for most of us to actually profit off of it.
been on this for a while, just took some time to write this on WSO. Maybe should have done this back in Sept / Oct.
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