Peloton Has The Yellow Jacket 🚴
Stock Deep Dive
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PELOTON Q2 EARNINGS
As most of you know, I have been a $PTON bull for quite some time (since 9/2/20 at $90 a share). I even wrote about my bull thesis back in November that covered all the reasons why I think this company has so much potential. If you missed that article I would highly advise giving it a read before scrolling further (THE NEW TECH CULT: PELOTON).
Let’s go over why $PTON crushed this quarter without taking up your morning.
Here are some Q2 highlights worth noting:
1. First billion dollar quarter: $1.06B rev (+128% YoY)
2. Q2 Gross Margin was 39.9%; Connected Fitness Product GM was 35.3%, Subscription Gross Margin was 60.3%, and Subscription Contribution Margin was 65.3%
3. Q2 ending Connected Fitness Subscriptions grew 134% YoY to approximately 1.67 million
4. Net income for Q2 was $63.6 million vs. a net loss of $(55.4) million in the same period last year.
As you can see, they nailed it on every single metric and were up in every category from last quarter. I really only see this growth expanding into next quarter as everyone who didn’t get a cultbike for Christmas (because of the waitlists) will now be getting them in this quarter. Peloton gave us a future outlook for Q3 as well as shown below.
The only big problem I can point at $PTON right now is their demand is so great that they are simply having trouble pumping out enough cultbikes in time. When it comes to a business, I truly believe that is a good problem to have. However, Peloton stated they are actively working towards fixing this and putting money towards expedited freight. If you are confused why I call them cultbikes it means you didn’t read my semi-satirical prior newsletter about Peloton which makes me sad but long story short I believe Peloton is practically a cult (and when it comes to buying stocks you never short a cult).
Here is the good news covering the logistics “issue”: Peloton will pump $100 M into delivery logistics to ease supply concerns - Tech Crunch
Wait the share price is down?
There has been a massive run-up in $PTON stock before earnings from $147 to $157. Those that have been in the game for a while know that short-term share price movement before and even after earnings calls can largely have ZERO bearing on the future of the company or the given earnings report. Why? It can be anything - could be “longs” taking gains, lots of options activity before earnings due to high implied volatility, or just a classic retail panic sell because of “supply” issues. Or it could be firms trying to shake out retail and hoping to get in $PTON at a lower price. We won’t ever truly know. $AAPL has had I believe three straight quarters of red days after their earnings. It’s almost become expected for $AAPL to have a red day after earnings at this point. Does it mean anything in the long-term outlook? Absolutely not, it’s up over 150% since March lows. Stick to the numbers - $PTON had an amazing quarter. This is not advice and all are my opinions but I am looking to add more shares/calls.
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Have a great Super Bowl weekend!
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