PTON- The Haymaker Round 2

Well here we are again. The disaster company of peloton. Here is my bearish thesis on why this stock should tank comes earnings on Feb 8th.
Peloton is one of those covid pumped stocks. Along with netflix, zoom, doordash, ect…. We already got a taste of PTON going downhill during the ER in Nov. since then its been nothing but bad news for peloton. No one is buying there products now that covid is over. More people are coming out of hibernation and going outside, going to an actual gym, enjoying life as they should be. Peloton has reported to be closing many stores, rumors of suspending production, and less customers buying there bikes for a ridiculously high price of around $1500-$2500…. Recently PTON had a little taste of what some bad news will do to the stock when the “rumor” of suspending production was released…. Pelotons CEO was quick to construct a damage control release note by releasing guidance early and make up some bullshit to save the company share price from prematurely going to 0. There was a small rebound but it has since begun to selloff again. Come this earnings report im betting on another miss in sales, eps, and if they release more guidance its going to drop like a rock, just like in November. Will this be another one for the books. Covid stocks finally correcting to there fair market value? I guess well find out soon enough.

Links w news:

Peloton closing stores and considering job cuts

Decrease in demand

https://bvchealthandfitness.com/peloton-slows-production-reportedly-facing-decrease-in-demand/

Please add anything to can to this, even make a bullish case, as for me its only a downhill ride from here.

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I’ve been seeing this and wondering how much more it could possibly go down? It’s been hammered from everything on bad press this past week so I thought we’d have seen the floor on it.

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This is why you should only take gamble positions to hold through ER. If management pulls some shit out of their ass and spikes the stock through ER, puts will be easy money afterwards when the market digests it and rejects it.

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Yes, King. I shall be entering with you. This is one of those situations where they can no longer produce their mainline products. This has a lot of certainty to continue this downtrend over the coming weeks especially given the current health of the Market.

Like- they need to either do two things to keep from going under. Either a PR move to assure they’re going to turn the company around or be bought out by Apple which isn’t out of the realm of possibility.

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Thinking I’ll play Feb 18th $25. Cheapest and most OI I see so far on puts, meaning they’re likely be the best ones to play if another dramatic drop occurs.

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One thing to keep in mind for pton is that they are generating monthly subscription revenue from each customer. So even with production slowing they should be keeping a fairly steady revenue stream.

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I like to consider the factor that a lot of people also tend to let exercise equipment sit and collect dust because maintaining a workout regime can be difficult for many. Especially more so with people going back into the workforce rather than working from home. I wouldn’t be surprised if the amount of monthly subscriptions has dropped a good bit over the last few months.

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@Ridn2lo

Even a dying comedy show makes fun of workout equipment.

The problem with it is that it still means reduced revenue, which can heavily impact earnings in a negative direction. The point is if they don’t have a production, that leads to little to no growth in subscriptions and even a loss in interest as these products DO begin to collect dust.

Right now it’s a matter of if we expect the rest of the earnings to be bad due to their current decline.

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Definitely see the bear case and I agree with you, I just saw the main focus only on production so I wanted to bring another element into the conversation to cover all the possibilities.

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The Connected Fitness subscription revenue and growth is the bulk of the value in the company. They are churning net monthly Connected Fitness subscriptions at an average 0.79%/month (9.5% churn a year). Their subscription revenue growth is tied to equipment sales. If they don’t sell enough equipment to offset the yearly subscription churn and don’t sell a lot more to keep the growth up, I’m not sure how they can justify even this valuation. We will find out in their ER. People are going to grill them on the productions numbers and what reduction they are taking.

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They were supposed to be working on releasing a rowing machine to add to their product line, but I haven’t seen much about it in months. I’m curious if the project was scrapped or just put on the back burner. Either way, they had to have burned through some cash on the R&D for that which could affect their earnings. I’m interested to see how much cash on hand they are holding currently.

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They raised $1B on Nov 11. Think they jumped in front of the slowing demand. Curious how much they have now as well.

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I wonder if they could sue if their products keep getting associated with heart attacks. That’s not a reputation they’ll want to have. I’d think if my fitness products kept getting associated with heart attacks on TV, I’d be pissed and getting lawyers involved.

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Just dropping this here. Blackwells stake is pretty small so I don’t see them being able to push this through.

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PTON is pumping heavy on acquisition rumours: Amazon, Other Potential Suitors Explore Peloton Deal - WSJ

With earnings on Tuesday, it looks like the pump is setting up for a decent put entry on Monday to benefit from the inevitable sell-off on unfounded rumours and expected bearish earnings, and to capitalize on IV farm leading to earnings.

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News was released that PTON has “suitors” like amazon interested in peloton… PTON ran on the news as algos went crazy buying all the way up to $35 at this moment. this comes at a very interesting time. PTONs earnings are this tuesday coming up Feb 8th. In my opinion this seems to be another act of damage control before they release god awful earnings and an even worse guidance report. One thing to look out for is for peloton to say that a merger is imminent as more damage control during the earnings call… this could trigger algos to buy. Im pretty confident that PTON will Guh again this earnings and puts should be rather safe, of course do not go in heavy as earnings are always a gamble. With the recent pump i see a good opportunity to get some puts before earnings is released.

Link to aritcle.

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PUTS PUTS PUTS

entering monday at around 11am, buying ATM or slightly ITM

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Are you buying for Feb 11 or Feb 18? Are we concerned about theta at all? The 11th is 3 days out after earnings but I’ve lost profits on that many days before…

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I am buying FDs. IV will spike Tuesday afternoon so you want to get in before then.

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Safer bet is to go for feb 18ths to mar 4 if your holding through. If your playing the pre earnings then feb 11ths should be alright

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