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Subject:  Re: PTON Q1 2021 (9/30/2021) Results Date:  11/5/2020  11:35 PM
Author:  RafesUserName Number:  73223 of 77288

"GM is in high 30s temporary as they take additional shipping expense to bring more bikes from Taiwan for Christmas :). I‘d count low 40 as normal GM (at least for now) and subs GM should trend to 60s. If we take mid/long term approach GM would be going up as subs revs will become bigger piece of the cake."

Hi LearningInvest0r, you illustrate why I called this "a red flag to watch". The FULL fiscal year guidance is low 40s and there are still 3 more quarters (this was just the first quarter). If this quarter's GM is lower for one-time reasons that is actually worse. It means they expect NO improvement over the next 9 months! Part of my investing thesis is that they will grow subscriptions, which are higher margin, and the GM will improve at both the subscription segment and as a percent of the total GM. If they are growing above 100% overall and much much more than that in the subscription area, then why wouldn't they expect much better operating leverage? Even if they are sandbagging this is a big problem to me. Please poke holes in this thinking if you can.
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