Peloton Interactive, Inc. is a provider of interactive fitness platform. The Company provides connected, technology-enabled fitness, and the streaming of immersive, instructor-led boutique classes to its customers. The Company segments include Connected Fitness Products and Subscription. The Connected Fitness Products segment include the Company’s portfolio of connected fitness products and related accessories, Precor branded fitness products, delivery and installation services, Company’s branded apparel, extended warranty agreements, and commercial service contracts. Its Subscriptions segment provide access to content in its library of live and on-demand fitness classes. The Company products include Peloton Bike, Peloton Bike+, Tread and Tread+. Its accessories include cycling shoes, dumbbells, resistance bands, reversible workout, bike mat, heart rate monitor, yoga blocks, yoga straps, cleats, pedals, bike weights, and among others. (Source: Refinitiv)
Yesterday +20% rally was resulting from the speculation that $AMZN $NIKE $APPL or $DIS are interested in buying the company. No wonder, given that the stock went from 50B valuation in 2021, to around 8B currently.
Today, we have had news that the current CEO John Foley will step down and become Executive Chair. He will be replaced by Barry McCarthy, most recently the CFO of Netflix and previously at SPOTIFY with successful IPO.
McCarthy is the proper “finance” guy and, thus, he will bring operational and financial efficiency to Peloton. We just received the news that c.20% of the global workforce will be cut, or 2800 jobs. These changes should not be surprising given that McKinsey was recently engaged (which I wrote about it before). Although the market initially took these news as negative the stock price came back from massive drawdown to positive pre-market. In fact, market really did not like Foley recently (also due to his lavish spending which cause outrage given the tanking PTON price), thus the appointment of Barry McCarthy could actually be positive.
In fact, it is likely that Barry will “clean up” (“achieve at least $800m of annual run-rate cost savings through operating expense efficiencies and significant margin improvement in its Connected Fitness category") the company and prepare it for the sale to one of the aforementioned buyers. Personally, I think NIKE makes a good fit given their roster of talent, apparel etc. Apple could also be interesting, given the focus on subscriptions and an enormous amount of cash. I think that 8B is a bargain and that the stock will rally to at least 40 USD within the next weeks. Everyone should be very careful as the stock is very volatile. Current price is getting interestingly close to PTON IPO 2 years ago and, thus, seems attractive.
We have just had the Q2 Earnings reported. The Earnings Call will take place at the close of the session today (5pm EST).
𝙁𝙞𝙨𝙘𝙖𝙡 𝙌𝟮 𝙀𝙖𝙧𝙣𝙞𝙣𝙜𝙨 𝙎𝙣𝙖𝙥𝙨𝙝𝙤𝙩 - 𝘼𝙨𝙨𝙤𝙘𝙞𝙖𝙩𝙚𝙙 𝙋𝙧𝙚𝙨𝙨
NEW YORK (AP) _ Peloton Interactive Inc. (PTON) on Tuesday reported a loss of $439.4 million in its fiscal second quarter.
The New York-based company said it had a loss of $1.39 per share.
The results missed Wall Street expectations. The average estimate of 10 analysts surveyed by Zacks Investment Research was for a loss of $1.18 per share.
The exercise bike and treadmill company posted revenue of $1.13 billion in the period, which also fell short of Street forecasts. Eight analysts surveyed by Zacks expected $1.14 billion.
For the current quarter ending in April, Peloton said it expects revenue in the range of $950 million to $1 billion.
The company expects full-year revenue in the range of $3.7 billion to $3.8 billion.
𝙐𝙥 𝙤𝙧 𝙙𝙤𝙬𝙣, 𝙈𝙅?
I personally bought more yesterday at 29.11. I believe we will reach 40 within the next weeks, which would make over 33% return. Importantly, the price action will likely be incredibly volatile, thus it is certainly not for faint hearted and, analogically, is perfect for swing trading. I think that the risk / reward is interesting in light of the potential takeover.
In terms of fundamentals, the company has 613M cash, 838M total debt, 35.74% debt to capital (all pretty good numbers). It is turning about 1B a quarter in revenue, to be increased to around 1.5B in FY3. So far, the net income is naturally not there yet, with projections for FY3 being close to 0. Bringing the CFO of Netflix to be the CEO would likely improve margins.
Peloton generates 78.31% Revenue from Connected Fitness Products and 21.69% from Subscriptions (that are very lucrative for potential buyers). It has bult a very strong brand (bringing Beyonce and the like on board) and also built its apparel.
93% of Revenue comes from the US and 7% from the UK. Big potential to diversify here, although the post-Covid trade has been brutal for PTON.
Top Investors include Baillie Gifford & Co. at 10.61%, Vanguard at 7.48% and BlackRock ar 3.38%. Let us not forget that PTON is also currently listed in NSDQ100 and has been one of the most undervalued stocks there. This is a positive, but can change if we trade below 10B.
Peer analysis actually shows other high tech stocks, albeit in different businesses. Comparing the level of revenue, Twitter brings 4.8B and is valued at 28.8B. Snap brings 4.12B (just below 4.14 for PTON) and is valued at 61.5B That is over 6X PTON, thus showing that the previous valuation of 50B is comparable to such high growth companies and current 9B valuation is really attractive.
𝙒𝙝𝙖𝙩 𝙖𝙧𝙚 𝙮𝙤𝙪𝙧 𝙩𝙝𝙤𝙪𝙜𝙝𝙩𝙨? 𝘼𝙧𝙚 𝙮𝙤𝙪 𝙟𝙪𝙢𝙥𝙞𝙣𝙜 𝙤𝙣 𝙩𝙝𝙚 𝙝𝙞𝙜𝙝-𝙨𝙥𝙚𝙚𝙙 𝙏𝙧𝙚𝙖𝙙𝙢𝙞𝙡𝙡?
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