Peloton Is Creating A New Fitness Category, Not The Next Fitness Fad

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About: Peloton Interactive, Inc. (PTON)
by: The Non-Consensus
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The Non-Consensus
Long/short equity, research analyst, healthcare, biotech
Summary

Is Peloton the next short-lived fitness fad? I believe they have a lasting product with the engagement of a live class and the convenience of a home workout.

Currently, heavy up-front investments in a new headquarters, its treadmill product, its supply chain, and an international expansion mask a highly profitable business. Profitability will come with scale.

I see further potential upside to consensus sales, driven by its treadmill product, higher marketing expense, and geographic expansion into Canada, UK, and Germany.

Sum of the parts valuation, with a 3-4x 2021 sales multiple on the equipment segment, and a 8-10x 2021 sales multiple on the subscription business, points to a $30-34 stock price.

Source:Yehua Yang

Peloton (PTON) is a "live fitness" company that combines both fitness equipment and online fitness classes into a seamless workout from home.

There are two key issues around this stock