sounds like you should have taken Buffet up on his $1MM hedge fund vs. index challenge.
BTW, how many years in the row did your strategy beat S&P500 and by how much?
Peloton just announced quarterly earnings.
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Hmmm…shedding users is not a term a subscription- based company wants to see.
Even though they have traditionally made the majority of their revenue through hardware sales, losing customers does not trend well.
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I saw it dropped below $3 for a bit last week. still continues to blow my mind how far down it has gone
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I’m seriously starting to wonder if the board is the problem here. At some point they’ve gotta understand the never-ending news cycle is more damaging than not.
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So they’re working to restructure debt, return to profitability. The EC podcast highlighted that they built, or overbuilt, on bikes. What am I missing?
Peloton hasn’t turned a profit since December 2020 and it can only burn cash for so long when it has more than $1 billion in debt on its balance sheet
Bankruptcy looms large in the not-to-distant future.
They continue to believe there is a path to growth from where they are vs. right-sizing the company and aligning it to the marketplace realities of today.
This is exactly why I said any IPO for this company was ultimately doomed. There was a market limit in terms of household penetration and they have largely reached that, thanks to COVID.
Except they haven’t done much of anything outside North America (same Germany/UK/Australia). They keep saying (quarter after quarter) that intl expansion is coming soon, yet the can keeps getting kicked down the road. In this earnings letter, they seem to imply they’re going to pause international expansion, but state they have no intentions to leave existing markets.
Somewhat interestingly, looking at the earnings numbers released today - they did actually grow the ‘Connected Devices’ over last quarter (that’s the hardware sales one). Though, their app-only memberships dropped (likely the result of the @#$#-show of never-ending price and feature changes there). Albeit despite the app subs dropping like a rock, they did note that app-driven revenue actually increased…so…business I guess.
I do think there’s still tons of potential market in the US, it’s just not right-sized to the massive number of employees they have today relative to that market.
@koalb I think during the pandemic we saw how PTON business would do during the best of circumstances…lock people in their homes and send them checks for a few thousands of dollars.
Now, we are on the cusp of finding out how PTON business will do under some pretty trying conditions as macro circumstances turn negative. I’m in the camp that think PTON products are at the extreme end of discretionary. Not quite luxury but definitely one of the first things that’s gonna go if a consumer becomes unemployed.
That’s just the normal business cycle. The problem is that PTON does not have a normal balance sheet. They are way out over their skiis on the liability side of the balance sheet during what is turning into an extended period of higher (relatively) interest rates. So options for shoring up the balance sheet are limited or non-existent.
In short, I don’t expect it’s going to matter who the CEO is or what capital structure decisions PTON make in the near to medium term. Macro conditions are going to overwhelm all of that. It’s gonna be tough.
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Who at this point that isn’t already a user?
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Anyone who didn’t get into the platform before, especially as the platform expands in sport areas.
No different than TrainerRoad, Zwift, Apple, Garmin, or others.
I mean, they literally never stopped growing pre/during/post-pandemic. And they’re the only ones actually releasing their numbers. As much as people love to hate on Peloton, everyone else in the industry shrank (user-base) post-COVID, or at at minimum growth stopped. This last quarter they added 52K pieces of hardware to the market (bikes, rowers, or treadmills). That’s still an impressive number of hardware units.
They have a product people love, and their churn numbers are insanely low. What they also have is just simply WAY too much overhead. Cut the overhead, bring things back in line, and keep growing.
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That seems wildly unrealistic for any product, be it exercise bikes to dish soap.
I’m so confused.
You’re saying no company out there grows?
I mean, the numbers released this morning don’t lie: They’re growing. It’s a factual thing you can’t really argue with. There’s lots of things you can argue with (strategy, overhead, etc…). But subscriber numbers are very very simple.
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No? Sure, every company aims for reasonable sustained growth. Peloton has entered the mature phase of their existence and small consistent growth would be great, keeping up with inflation and demographics would be reasonable, if not necessarily achievable, targets. Explosive growth to save themselves from the crippling debt they have? Not so much, that already happened and they oversaturated almost all of the prospective user base.
Nobody is saying they’re looking for “explosive growth”.
Saying there’s tons of potential is different than “explosive” growth. There is still tons of potential. How they tap into that is Peloton’s problem.
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Well I guess we just disagree on this point then. Very modest growth isn’t potential in any sense I would think of. It’s just maintenance.
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Yeah, my comment was really geared toward the US market. I am not familiar enough with the international business strategy or presence. But, to your point, if the opportunity is there, and they are struggling for sales, WTH are they doing? They would be far better off investing in an international operation than partnering with companies such as Lululemon on marketing efforts.
My main takeaway from the article above was that they struggling for a vision / strategy and, as a result, are just burning money on initiatives that are not going to produce results.
I would probably quibble with the “tons” descriptor, but overall agreed. There is still potential but the structure of the company needs a massive overhaul.
We toured some warehouses recently as our lease was up….one was warehouse still under lease to Peloton and they were looking for someone to sub-lease it. ~60k sq. ft. sitting empty.
Well, not really empty since all the racking was still in there and they basically just walked away from it.
Not a good sign Peloton to ruin the secondhand market by charging a $95 ‘used equipment activation fee’
This seems to imply that Peloton believes it needs to find ways to grow revenue outside of growing its subscriber base
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Rugs? I thought it was curtains for him…
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