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Time To Move On From Nautilus

Apr. 02, 2021 11:03 AM ETNautilus, Inc. (NLS)12 Comments


  • NLS has been cut in half.
  • But given it appears to be behind the competition, I don't see any upside catalysts.
  • The valuation is fair enough, but there are issues with the chart as well.

Low section of woman training on exercise bike at home
Photo by SimonSkafar/E+ via Getty Images

At-home fitness OG Nautilus (NYSE:NLS) had a monster 2020. The pandemic saw its shares plummet to just two bucks before investors realized that at-home fitness would be a booming industry in a pandemic-stricken

This article was written by

Josh Arnold profile picture

I've been covering financial markets for ten years, using a combination of technical and fundamental analysis to identify potential winners (and losers) early, particularly when it comes to growth stocks.

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Comments (12)

Siyu LI profile picture
I think almost all negative opinions offered in this article would stand true when you issued a very bullish article 3 months ago.

This leads me to believe your change of view on NLS is largely driven by the change of the market sentiments.

Nothing wrong with that - I just think it would make more compelling arguments if you present it that way.
Consolidation is all over this industry and someone will snap up NLS
"Nautilus now has to be much better than the alternatives to win, which is a tall task indeed."...
Bit dramatic. NLS does not have to be MUCH better...it needs to stay the course...which is not a tall task in the slightest.
Robbe Delaet profile picture
I'm confused.
Nautilus delivered on everything an investor would hope for: putting out aggressive subscription-based targets, drastically changing its marketing approach, improving the product line-up, and even putting out amazing revenue growth targets of 10% annually.

And somehow you changed your "very bullish" rating to "neutral", while the stock declined 10% since your last article?
Based on what? Because their targets are too high? lol
My best guess is that your opinion is getting impacted by market sentiment.

We are looking at a company targeting to grow 10%+ per year, valued at a free cash flow yield of 13%. Be greedy when others are fearful.

Best, Robbe
Euphoric Investment profile picture
@Robbe Delaet Understandable to be neutral if you're convinced at-home fitness is a fad, but for the author to be bullish on Peloton and neutral on Nautilus is nonsensical at current valuations. Peloton is the high growth/high multiple play while Nautilus is the value play until they prove themselves several times over. If demand for Nautilus' brands continue to grow in 2021-2022 ("post-pandemic") then we'll see a NLS trade at a multiple. Simple as that. 

Also, if their subscription revenue targets come anywhere close to projections ($200 million/year), their multiple should progressively increase as the forecast come to fruition. Subscriptions = recurring revenue and gross margin expansion.
Damon Judd profile picture
@Robbe Delaet great comment and I agree with you. Have been adding shares starting at 19 and averaging down to 15. Stock will be back above 30 by year end if not before.
Nautilus equipment is a staple in every gym I’ve been to in the last 20 plus years - and it’s not going away. If you’re banking on folks not returning to gyms; you’d be wrong. I think folks are more serious about fitness/training with tons of equipment/weights prefer the physical gyms and will never give up memberships.
stuck profile picture
NLS is undervalued. If you compare it to the poorly managed, overpriced equipment, reopening hype, poor quality Peleton equipment. PTON is a jole valued at 33 billion. People are not taking their free money and buying a 2500 sweater dryer so they can pay 40 a month for an exercise show. PTON should be a 30 dollar stock. Or is this another pump stock where we ignore the 210 PE and only look at price to sales. Give me a break. PTON is overvalued by 600% they will never hit their subscriber goal.
So they are expecting revenue to be flattish in 2022, but EPS to be 35% lower. Why? Are they planning a major investment in the business during 2022? I like this company and it’s products...also love the very low valuation in today’s market. However, there’s no arguing the chart/momentum weakness that you’re showing.
It boggles the mind how Tonal received a $1.6b valuation recently; yet, Nautilus is trading at a market cap less than revenue. It would seem that all Nautilus needs to do get this stock to multiply exponentially is create a mirror type product with resistance bands and hire a better marketing team. I was a fan of the leadership change recently, but it’s clear to me that they are still lagging on their marketing. The informercial advertising days are over. I do not know the statistics, but my observation is that social media influencer advertising is highly effective. I’d like to see them turn this thing around. It doesn’t seem like a tough task for a competent leadership team.
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