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Hi Rafes,

correct me if I'm wrong, but if they guide for low 40's margin, and in Q1 it is around 39, then it should improve over the course of the year, even more if they are sandbagging, in order to reach their forecast, should it not?

Anyway, looking ONLY at their subscription revenues, it is 156.5m, growing at 130% YoY with 58.5% GM, and with the entire PTON currently valued at $37 billion.

Compare this to say, Datadog, which will post on 11-10 let's say between 150m-165m revenue representing 57% to 72% YoY growth with a continued GM of 80% and presently valued at $31 billion. (The reason for this revenue growth range is that they usually add 17 million QoQ revenue, plus a generous upside margin to reach +25 million QoQ.)

Wouldn't you think that the lower margins of PTON subscription revenue (25% lower than DDOG) is more than compensated by its growth rate (double of DDOG at midpoint), and that in fact based on subscription revenue alone, PTON should be valued the same as DDOG?

In such a case, the hardware part of the business which represents 80% of the revenue ($600 million, as total revenue is $758m) and growing well above 100% with margins a little below 40% would be valued at a paltry $6 billion...

The whole package seems like a bargain to me. I think it also stems from the fact that growth is so much more valuable than margins, and even then PTON's margins are nothing to be ashamed of.

The backlog is more worrying to me, as people might get fed up with the delays. Nevertheless, countering that fear is that even bigger tailwinds await: return to partial lockdowns, Christmas presents, New Year's fitness resolutions, and the checked fact that regular people giving a go at a Peloton spinbike quickly find themselves in the shape of their lives (check YouTube!)

Yes the bike looks pricey, but the return in terms of fitness is apparently incredible; it is fun; the spin bike is one of the best; the below $80 monthly fee seems to me as digestable by gym-goers.

This post is longer than I wanted, but I hope it has been useful to you and others. After all, I just began investing according to this board's principles. Forgive me if it does not add anything.

Best regards

Sedi
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