“Historically, I've had a fairly concerned view about this company. Right now, there's three million subscribers, which means almost six million people, paying $44 a month with a very healthy profit flow through. My suggestion would be, and has been, bear hug your brand loyalists, focus on the fact that there is a very healthy business with incredible cash flow. But to do that, you have to acknowledge you're not an uber growth business. I think some of these companies take a breath and they say, ‘OK, we need to restructure.’ But in the same sentence, they say, ‘but we're still going to grow.’ That's dangerous and it rarely works. There's a time when companies are supposed to grow and there's a time when they're supposed to focus on value and improving their brand and restructuring." I joined Yahoo Finance to discuss my team’s belief that Peloton Interactive is effectively running two separate businesses right now, 1) a profitable, cash generating existing subscriber base and 2) a cash-spending pursuit of new subscribers. Watch the full segment here: http://spr.ly/6045gB4GJ
Simeon Siegel, CFA joins Yahoo Finance to discuss his belief that Peloton is effectively running two separate businesses right now, 1) a profitable, cash generating existing subscriber base and 2) a cash-spending pursuit of new subscribers. “Historically, I've had a fairly concerned view about this company. Right now, there's three million subscribers, which means almost six million people, paying $44 a month with a very healthy profit flow through. My suggestion would be, and has been, bear hug your brand loyalists, focus on the fact that there is a very healthy business with incredible cash flow. But to do that, you have to acknowledge you're not an uber growth business. "I think some of these companies take a breath and they say, ‘OK, we need to restructure’ but in the same sentence, they say, ‘but we're still going to grow.’ That's dangerous and it rarely works. There's a time when companies are supposed to grow and there's a time when they're supposed to focus on value and improving their brand and restructuring." http://spr.ly/6045gB4GJ
Great perspectives, Simeon! Focusing on offering new and innovative products and services to your most loyal, high value consumers can create a ton of value ... for those consumers and for shareholders!
Holly Amaya
3w
Great segment.
Great point on the "bear hug of brand loyalists", and the restructuring/growth combo view. Balancing 1) and 2) is challenging, and IMHO the company's position on the spectrum varies over time (there is probably times where 1 carries >50% weight, and times where it carries <50%). Success of 2) depends on the creativity of the pursuit, and the risk of getting low/negative returns on the spend is usually very high. But have to take the risk and fight for the rare winning spot.
Scott Newton
3w
The fiercely loyal Peloton customer fans really do seem to enjoy the service, and I think an interesting challenge is to see how they could help in building out the customer base. I also don’t know how effective the very expensive retail locations are which are in prime locations in major cities and it appears rarely have traffic. Is there a better way to build this business?
Spot on, as usual. They have an amazing continuity file and a low churn rate. The brand is strong- and Peloton has RAVING fans. Their content and instructors are world class so how they can be blowing it on such a massive scale is baffling. The buck has to stop at the top.
Managing Director, Senior Analyst, Board Member
3wGreat chatting Madison Mills and Seana Smith