2024-04-15 18:15:17 ET
Summary
- Peloton’s turnaround hasn’t produced the intended results, with revenues, members, and paid subscriptions declining.
- Peloton has $1.7 billion in debt maturing in the next 2 years, which it can’t afford to pay back using its cash balance of $737.7 million.
- Peloton isn’t likely to generate significant free cash flow before its debt maturities.
- Peloton’s options to deal with the debt maturities are refinancing or bankruptcy, both of which will negatively impact its shares in my opinion.
It’s been 2 years since Peloton Interactive, Inc. ( PTON ) started shifting its business model from one based around selling physical exercise devices to one built around subscriptions. That doesn’t seem like a bad plan on paper. However, the results have been lackluster so far. Since subscriber growth is mainly dependent on sales of exercise bikes and treadmills, Peloton’s declining hardware sales have been a major headwind to subscriber growth. In fact, Peloton’s members declined from 6.7 million in Q3 FY 2023 to 6.4 million in Q2 FY 2024....
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Peloton: Between A Rock And A Hard Place