20200313-香橼研究-Peloton_Investors_Must__Eat_the_Apple__and_Accept_the_Truth_5页_544kb

Citron Research Summary: Peloton ($PTON) Analysis

Core Content

Citron Research provides a critical analysis of Peloton ($PTON) and highlights potential risks and valuation concerns, despite acknowledging the company's achievements in the connected fitness space. The report is framed as a short-selling perspective, emphasizing the market's overvaluation and the looming threats from Apple's entry into the fitness sector.

Main Points

• Market Context: The report begins by expressing concern for the global economic situation and the potential for a recession. It suggests that the current market environment presents opportunities for short sellers.

• Apple's Threat to Peloton: Citron highlights Apple's upcoming iOS update, which will feature guided workout videos (cycling to yoga) integrated with Apple devices like the iPad, Apple Watch, and Apple TV. This move positions Apple as a major player in the fitness industry, directly competing with Peloton.

• Peloton's Limitations: The report criticizes Peloton's hardware, noting that its bikes lack basic features such as a monitor, iPad compatibility, and USB ports. Additionally, the Peloton screen cannot pivot for yoga, which is a key feature for many users.

• CEO's Comments: John Foley, Peloton's CEO, mentions that the company aims to win in digital-only fitness, which could lead to more digital members and more connected fitness product sales. However, this strategy is seen as potentially risky given the market conditions.

• Valuation Concerns: Citron compares Peloton's valuation to other "stay-at-home stocks" such as Teladoc and Netflix. It calculates the Enterprise Value per Subscriber for Peloton at $7,303, significantly higher than the peer average of $620, indicating overvaluation.

• Financial Metrics:

  • Enterprise Value: $5.2 billion
  • Subscribers: 700,000
  • EV per Subscriber: $7,303
  • Market Cap: $1,433 billion
  • Debt: $496 billion
  • Cash: $1,487 billion
  • Price Target: $5

Key Information

• Investor Warning: Citron warns investors about the potential risks of investing in Peloton, including financial strain, high churn rates, and intense competition from hardware manufacturers.

• Market Model: Selling high-priced bikes ($2,000) with a $39 monthly subscription is deemed unsustainable in a potential recession.

• Comparison to Peers: Peloton's valuation is highlighted as being far above industry peers, suggesting a lack of long-term value.

• Apple's Integration: The report emphasizes Apple's technological integration and its potential to disrupt Peloton's business model.

• Legal Disclaimer: The report includes a comprehensive legal disclaimer, clarifying that it is not investment advice and that all information is presented "as is" without warranty. It also outlines the terms of use and liability limitations for users.

Conclusion

Citron Research concludes that Peloton's business model is under threat from Apple's entry into the fitness market and that the company's valuation is inflated. The report suggests that investors should be cautious and consider the potential for a significant decline in the stock price, with a price target of $5. It also draws a parallel to the decline of GoPro, suggesting that Peloton's dream of becoming the official platform for home health may not materialize.

Summary Table

Company	Enterprise Value (in BN)	Subscribers (in MN)	EV per Subscriber
Peloton	$5.2	0.7	$7,303
Teladoc	$9.5	36.7	$259
Netflix	$164.1	167.1	$982
Peer Average	-	-	$620
Peloton vs. Peer Average	-	-	1077%

Final Note

Citron Research encourages investors to critically assess the information and to conduct their own due diligence before making any investment decisions. The report serves as a cautionary note against overvaluing Peloton in light of the competitive landscape and economic uncertainties.