Peloton (NASDAQ:PTON)

Peloton Interactive (PTON) is the leading interactive fitness platform with a loyal community with over 5.4 million Members. Peloton pioneered connected, technology-enabled fitness, and the streaming of immersive, instructor-led boutique classes for its members anytime, anywhere. Peloton makes fitness entertaining, approachable, effective, and convenient, while fostering social connections that encourage its members to be the best versions of themselves. An innovator at the nexus of fitness, technology, and media, Peloton has reinvented the fitness industry by developing a first-of-its-kind subscription platform that seamlessly combines the best equipment, proprietary networked software, and world-class streaming digital fitness and wellness content, creating a product that its members love. The brand's immersive content is accessible through the Peloton Bike, Peloton Tread, Peloton Bike+, Peloton Tread+, and Peloton App, which allows access to a full slate of fitness classes across disciplines, on any iOS or Android device, Apple TV, Fire TV, Roku TVs, and Chromecast and Android TV.

Peloton has been a controversial name for some time now. If you own one you probably love it, and if you don’t own one you probably have never tried one. In case you forgot, Peloton completed its acquisition of Precor, in turn being able to establish U.S. manufacturing footprint, enhance its R&D, and address supply constraints. Peloton has been on tear with adding new content, instructors, and class series involving music artist, and now their new Peloton Apparel line. With CEO John Foley behind the wheel aiming for a lofty goal of 2 million subscribers could one day become reality. For quarter 4 of 2021 peloton had a total of over 5.9 million users with a 92% net retention rate. Those combined fitness enthusiasts completed 134.3 million workouts throughout the quarter up 75%. Connected Fitness Strength workouts grew 256% year-on-year and now represent 18% of the total mix of workouts for Peloton.

Notable Events

During 2021 peloton made several large moves for the future. Early on in 2021 Peloton announced its expansion into Australia. Peloton unveiled the Peloton Corporate Wellness Program. This program not only offers employers, insurers, and partners the ability to offer subsidized subscriptions, but most importantly increases the Total Addressable Market. As mentioned above, Peloton also completed its acquisition of Precor in April and announced it will be building its first U.S Factory known as the Peloton Output Park. The Precor acquisition will help alleviate supply constraints and increases scalability to reach more homes, hotels, campuses, and multifamily residences. One of the most excited news released for investors is Peloton’s Net Promotor Score (NPS) reached a 94 and ranking #1 in Global Brands on Comparably. For comparison, Apple is ranked #6.

There are a few things for investors to be mindful of. Peloton’s Tread recall did affect numbers during the most recent quarter and investors should watch how the following quarters play out. Peloton since has fixed the issues and even increased safety features with the Tread. While there are tons of negative light being shined on the company surrounding the Tread and Tread+, there is still plenty to be excited about. Shareholders could have a lot to be excited about for the next few years and can be rewarded through the long term. With the recent market pullback, shares are trading lower, offering a great entry price.

When I first heard about PTON I was reminded to all the KETTLER bikes in the 1980s and 1990s standing around unused in every German household and I did not believe in the business. But looking further I can see unbelievable opportunities for PTON and think PTON can become the top dog of indoor fitness. Not only fitness freaks will use the bikes, treadmills and/or the app, there is a much bigger market: remote workers can train easilyat home, elder people can train without a higher risk of spills, parents of younger children can use their Sparerin for training, hotels can offer special training-opportunities to their guests. AR and VR can make the products of PTON much more attractive, when you can train in different regions of the world or with friends. At once PTON is building a strong brand with many famous faces in their advertising spots. Let’s peloton! I follow David Gardner‘s choice in his last 5 stocks sampler in the RBI podcast and think the drop of the stock price is a buying opportunity.