AAPL - Peloton: Great Product At The Wrong Price
Investment Thesis
Peloton (PTON) offers a compelling luxury stationary bike, treadmill, and content subscription. But it has entered into the "fitness wars" and competes in a smaller TAM than the company or analysts estimate. Further, its initial unit economics are not indicative of long-term trends. We have seen this story play out before with hardware plays like Jawbone and Fitbit (FIT), and with niche fitness players like SoulCycle and Yoga Studio.
We believe the stock is worth ~$15/share right now, suggesting 50% downside.
Highly Competitive Market
Peloton has entered into a highly competitive and fragmented