Peloton Stock Analysis - Peloton Recall - is $PTON Stock a Good Buy Today? | Summary and Q&A

TL;DR

Peloton is a growing fitness company with strong revenue from its connected fitness products and subscription services, although it recently faced a product recall. The stock has potential for long-term growth and is currently undervalued.

Key Insights

• 🐕‍🦺 Peloton's revenue growth has been fueled by increased demand for connected fitness products and subscription services during the pandemic.
• ✋ Subscription revenue has higher profit margins, which contribute to Peloton's overall profitability.
• 🦺 The recent product recall poses a challenge for Peloton, but the company's response and efforts to ensure customer safety may help restore confidence.
• 👶 Peloton has potential for long-term growth, especially with opportunities to expand internationally and introduce new products.

Transcript

hi i'm jimmy in this video we're looking at peloton stock ticker symbol p-t-o-n so we'll run quickly through the basics of peloton's business and then we'll touch on some of their recent earnings and look at some recent news that came out specifically about the peloton recall and finally we'll see if we can come up with a fair value for peloton sto... Read More

Questions & Answers

Q: What are the two primary sources of revenue for Peloton?

Peloton earns revenue from selling connected fitness products and through its subscription services for premium classes and training.

Q: How did Peloton's revenue and profit grow in the past few years?

Peloton's revenue has ramped up, especially in the past year due to increased demand during the pandemic. The company recently became profitable, but there may be a slight dip in profit in 2021.

Q: What caused the recent product recall for Peloton?

The recall was prompted by incidents where young children were injured or killed after being pulled underneath Peloton treadmills. A design flaw was identified, which led to the recall of affected treadmills.

Q: What is the fair value of Peloton stock and is it currently undervalued?

Based on valuation using the enterprise value to revenue multiple, the fair value of Peloton stock ranges from $105 to $125 per share. With the current stock price around $85 per share, Peloton is potentially undervalued.

Summary & Key Takeaways

• Peloton generates revenue from selling connected fitness products like bikes and treadmills, as well as subscription services for premium classes and training.

• Subscription revenue accounted for 20% of total revenue in 2020, while product sales accounted for the remaining 80%.

• Peloton's profit margins from subscriptions are higher than from product sales, averaging around 57% and 43% respectively in 2020.