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No. of Recommendations: 12
Hi Bear,

All great points.

How many years can they grow it significantly before they top out? My point is not that Peloton can't get there -- it's that I don't think any of us can really have a clue what demand will be a year or two from now...much less 5 or 10 years from now. And unlike a SaaS company, with something like Peloton, you kind of need to.

Over the next two years I think you're discounting:

1. New products: They have a treadmill that is coming at a lower price point next year. Plus rowing machines and other nice products are on the drawing boards.

2. Upgrade cycle: My wife is already looking at the new model and wants to upgrade. She views it as a car payment and will just extend out her contract for the new system and keep paying the monthly fee.

3. Low penetration rate: This one is probably the best argument for growth in the near term (1 to 2 years). They still have a huge market opportunity in both the US and internationally. Germany is the only non-English market they currently support. They can expand this initiative to Switzerland, and Austria easily where it is cold and fitness is popular.

4. Pandemic is accelerating: There is no sign is the crisis slowing. Infection rates are at an all-time high around the world. Exercise at a gym or fitness club is not an option for most for at least a year. Many gyms are still going to fail (sad). This will reduce the options available in the market as a whole.

But hey, don't listen to me. Everyone should make their own decisions. And if you sold and moved into something else, that's great. I may do the very same at any point in the future if I lose confidence in PTON or find a better opportunity.

Golf Caddy for Peter Lynch
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