Peloton (NASDAQ:PTON)

The Pitch

Peloton is a $30B company entering its first year of earnings profitability as a category disruptor with a large and expanding addressable market. After another guided 100%+ year in revenue growth for FY2021, I believe that Peloton will achieve annual revenue growth of 30% per year for the next five years. In that time, I believe that PTON will earn a 30x NTM PE multiple, as the market comes to appreciate its sustainable high rates of growth and strengthening competitive position. Taken together, this implies a 5-year price target of $215 for a 15.7% annualized return or 118% cumulative return.

Peloton is poised to capitalize on its brand, fitness media content, and first-mover advantage to deliver strong returns to shareholders for years to come. I believe that over a 5-year time horizon, Peloton is a strong BUY.

Thesis Points

Thesis Point #1: Massive Early-Stage Opportunity.

- TAM, SAM, and penetration are all growing and PTON's addressable market is wider than just gym-goers.

Thesis Point #2: Unique, Multi-Faceted Competitive Moat Will Forge Path to 100M Subscribers

- Peloton is more than just a bike. It’s more than just a class. By combining technology with media, and overlaying on top of that a cadre of world-class instructors, immersive classes, and engaging communities, Peloton has reinvented the way people work out. A Peloton subscription is as precious to people as their subscriptions to Netflix, if not more.

Full writeup here: https://johnsigmon.substack.com/p/peloton-pton-category-disruptor-with-underappreciated-post-covid-prospects