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No. of Recommendations: 1
Reading this has made my conviction in PTON waver a bit:

https://www.dailymail.co.uk/news/article-8982601/amp/Furious...

It's true that full ordering queues and high demand for a product are per se a good thing. Delayed shipping is not and there comes a time where customers are just too fed up with high waiting times and this seems to be the case here (of course not for all customers but news like this is something that always makes me cautious).

PTON is still one of my biggest positions and I trust they will get this situation handled. However if this keeps up I might trim my position and re-enter as soon as the shipping situation has been resolved and customers are still queueing for bikes at that time.
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No. of Recommendations: 3
I'm sure that your post will be deleted because it's spurious and unsubstantiated commentary.
Also, if you rely on anything the Daily Mail (known in the UK as "The Daily Fail") says about anything then you are on a one way ticket to Planet Lose.
Cheers, PB.
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No. of Recommendations: 6
WSJ had a similar article yesterday.


(paywall)
https://www.wsj.com/articles/some-peloton-buyers-are-sick-of...

Even Peloton fans have their limits.

As Peloton Interactive Inc. PTON 1.44% races to meet demand for its connected stationary bikes and treadmills, promoting equipment it may not deliver until 2021, some would-be owners are losing patience as they endure months long delivery delays.

Consumers are griping online, flooding customer-service lines, defecting to competing brands and sharing tips to re-create the Peloton experience on rival bikes and treadmills.

Mike (not selling but watching closely)
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No. of Recommendations: 7
I think this is overblown. I contacted Peloton customer service the other day just to see how bad it really was - and I was able to get in contact with somebody within minutes.

I’ve been talking to a few people who have orders also and they’re still on track to be delivered fairly quickly - 30 days for the cheaper bike.

Also, as for people buying competing brands - I think people are just buying something to get them by until their actual bike has come in. They aren’t cancelling they’re digital subscription, they’re just buying a different bike until they can get their hands on a Peloton (at least I’m guilty of this) - but still using the Peloton classes on the competing brand bike.

Sure, there are people who are cancelling their orders, but I think its few and far between compared to what the media is making of it. It’s like the same hysteria last holiday season when everyone made a big deal about their ad campaign which really wasn’t as a big deal as they were making it.

Respectfully,
Kashi - Long PTON
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No. of Recommendations: 5
I placed an order on 11/5 for the basic bike. While on their website it said shipping time would be 4-6 weeeks but after paying and placing the order the earliest delivery date available was 1/30. That’s around 14 weeks!! I contacted their customer service and said their website was completely misleading and the dates need to be changed but All I got was “sorry”. I’ve cancelled my order.
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No. of Recommendations: 1
I placed an order on 11/5 for the basic bike. While on their website it said shipping time would be 4-6 weeeks but after paying and placing the order the earliest delivery date available was 1/30. That’s around 14 weeks!! I contacted their customer service and said their website was completely misleading and the dates need to be changed but All I got was “sorry”. I’ve cancelled my order.

Not to give an excuse to PTON on this but I have yet to a company that gives a realistic delivery date to what is shown on the website when ordering (outside of comidity items through Amazon). The Lead time for most products are a static value assigned in the DATEBASE to that particular part with all sorts of other values like weights and measurements. The lead time seldom gets updated except through a quarterly review and nobody wants to extend the date The actual delivery date assigned only happens when the order gets placed and the system does a real query to availability.

I have heard so many complaints about this at previous companies and it often is wrong on both sides. I customer checks the portal to find 4 weeks for something they need urgently so they make a call to the sales rep or customer service only to find it is available in 3 days.
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No. of Recommendations: 0
Not to give an excuse to PTON on this but I have yet to a company that gives a realistic delivery date to what is shown on the website when ordering (outside of comidity items through Amazon). The Lead time for most products are a static value assigned in the DATEBASE to that particular part with all sorts of other values like weights and measurements. The lead time seldom gets updated except through a quarterly review and nobody wants to extend the date The actual delivery date assigned only happens when the order gets placed and the system does a real query to availability.

I have heard so many complaints about this at previous companies and it often is wrong on both sides. I customer checks the portal to find 4 weeks for something they need urgently so they make a call to the sales rep or customer service only to find it is available in 3 days.


Yes. And this seems to be significantly worse in a pandemic. If you add in the unprecedented surge in demand, I don't think it's reasonable to judge a company like PTON on this issue under current conditions. Just my two cents.
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No. of Recommendations: 2
So Kashi,
What precisely makes a Pelaton bike so superior to other stationary bikes and worth waiting for? Why not get another bike and use the Pelaton app?
Jille
No position
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No. of Recommendations: 0
Plus, the shortages are keeping margins higher on the equipment than if they had a 'surplus' of equipment and needed to get it out the door to jump start more subscriptions.
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No. of Recommendations: 9
Why not get another bike and use the Pelaton app?

The screen on the Peloton bike serves as the control panel for your workout: a view of the instructor, plus speed, resistance, output, the leaderboard (and where you stand on it), heartrate, community features (high-fives and so on), etc. You just need to look to one place to get all of these things, and to keep your workout on pace with the instructor's cues.

If you're using the app and another company's bike, you'd have to look to at least two places for these things (maybe three, if you want to follow your heartrate on, say, an iWatch). And some features you wouldn't be able to see at all -- e.g., the leaderboard: how you're doing relative to other people who are taking or have taken the class. And I don't think you can see output either. That's a combination of speed and resistance that's a key part of Peloton workouts, something instructors often cite to keep you on track.

In short, for a good, uncomplicated Peloton workout, you need the Peloton equipment. Everything you need to know or follow is synced there.
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No. of Recommendations: 57
I’d like to chime in here. One, let’s all agree that demand causing shipping delays is “mostly” a good thing. And, I believe management that COVID and lockdowns are probably a large reason for the delays and long wait times...

Two, my wife used the App with my old exercise bike for a while and then felt she was missing the true experience. I subsequently purchased her a bike. The results? My wife has now lost 30 pounds in 5 months! She loves it and is always telling me her class statistics (speed, resistance, leaderboard)...

Then, since she could see the instructions she started wanting the clothes. So, 5 months later I have literally purchased multiple $150 outfits from PTON. Why? Because as she slimmed down she needed smaller sizes. Now, she did sell her old sizes online to recoup some money...

The real question, and one I can’t answer, is how many people will return to the gym. How many will continue to workout at home and save the travel time to and from the gym. Or, as as happened to me, be happy they didn’t go to the spin class only to find no bikes available because the class was full. Or the treadmills were taken. Or as a woman, perhaps they just want to workout without judgement or men checking them out or hitting on them...

I do think many will return to the gym but in a more hybrid approach. The gym obviously has more equipment and it’s nice to socialize and sometimes just leave the house. So, my best analogy is the shift to streaming at home. I still like to go to the movies but also love to stream movies from the comfort of my home. I love doing both. There is room for both...

Cobra 🐍
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No. of Recommendations: 31
It's not about the bike - It's about the community and the quality of
the classes/instructors.

I was extremely cynical about the company when I first heard about - I
didn't get and thought it was a complete waste of money. But everyone
I talked to were hooked, so I finally decided to get the digital
membership for the other workouts - like yoga, outside running,
stretching, etc.

After just a few classes, I got it - I understood what everyone was
talking about. My wife and I have tried workouts on Amazon, youtube,
gyms, boutiques, etc. We've done it all. We'd pay $40 for A class at
a boutique gym for a yoga workout. At the time, the was $20 (now $13)
a month to take classes that were better than most boutique classes -
and we could do it on OUR time!

Still, we didn't think the company would grab the following it would
need to blow up and actually get people to leave their gyms for - it
was just too ingrained into our DNA to go to gyms - and convincing
people would be difficult - then COVID happened - and there became not
much other choice and now I believe it's a runaway train that can't be
stopped. It's like Netflix in it's early days. US is just catching
on and slowly expanding internationally and then one day we're going
to wake up and its just going to be a normal part of our life.

Now my parents use it, my sister uses it for meditation to fall asleep
at night, friends who are fitness trainers started using peloton -
Personally, I've had back issues that only consistent yoga and
stretching would fix - Peloton offered that and I'm in the best shape
of my life right now, because I was finally able to afford to take world class
yoga classes consistently on my schedule.

Even when things open back up - this isn't going to be go to the gym
or have a peloton - people will use both - the convenience is just too
great and the value too good.
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No. of Recommendations: 1
It’s the community effect. iPhone another great example. You don’t buy an iPhone for the hardware you do it because it links to FaceTime, iMessage and the Apple ecosystem. Peloton is building a strong user base who are loyal with great offering.

There will be some who just use the fitness app with their own bike. The monthly recurring revenue is still not to be discounted. Of course stickiness of those users are less than those who invest in the bike. However if they continue to innovate, invest in their supply chain and collaborate with great trainers and artists I don’t see why they can’t become significantly larger.

The idea of a hard live class workout from the proximity of ones living room cannot be underestimated.

Long peloton. Still a starter position.
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No. of Recommendations: 0
"they just want to workout without judgement or men checking them out or hitting on them..."

good point and the no judgement bit true of many men too. Old and fat does not make you feel good in gym full of the young and fit

Plus you never know going to a gym whether equipment is in use
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No. of Recommendations: 4
I suppose I’m just one more opinion in a sea of opinions on this, but I interpreted the shipping issues as fairly devastating, and exited my position the day Pfizer’s vaccine was announced. The holiday/winter quarter while the pandemic is still raging was a singular, perfect storm opportunity for Peloton—-and they couldn’t figure it out.

Consumers (unlike businesses) make purchases on sentiment and feeling just as much as they do on fundamental need, and the certainty of a **minimum** 3-month wait (thus missing the Holidays and most/all of the seasonal winter) is certainly enough to dissuade the marginal buyer of a highly discretionary and expensive piece of equipment. The reality of a vaccine just adds another reason to hold off and see if things improve. I foresee a lot of cancellations, which won’t impact the quarter’s sales as delivery will go to the next in line, but that’s still a permanent loss of a customer.

I still think Peloton could and will be a long-term winner, and hope good things for the company, but it seems likely to me that any near-term upside is kneecapped by the supply chain issues, and I fear that there is some permanent opportunity lost, as well.

Best of luck to all longs. PTON is still high on my watch list, but I can’t make a buy case for PTON in a concentrated portfolio.

Eric
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No. of Recommendations: 3
Another issue that bears watching is the amount of customers using financing to make their PTON purchase. I was looking into the S-1 of Affirm the other day, which is a fintech providing installment loans for e-commerce. Peloton is 30% of their revenue.

"Our top merchant partner, Peloton, represented approximately 28% of our total revenue for the fiscal year ended June 30, 2020 and 30% of our total revenue for the three months ended September 30, 2020."

To me, that's a sign that PTON may have tapped out its market.
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No. of Recommendations: 3
Why? Is Affirm's revenue flat, too? 30% of a growing Affirm number wouldn't be a problem for me.
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@wheelzofsteel,

Is there anything to indicate that Affirm is the only loan provider for Peloton purchases?
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No. of Recommendations: 14
When you go to buy a Peloton, they give you the payment plan option. As far as I can tell, that's handled by Affirm. The implication of Affirm reporting 28% of their TTM revenues coming from Peloton in one quarter, and 30% of their TTM revenues the next, is that Peloton-associated revenue growth only slightly outpaced the rest of their business.

According to a summary of Affirm's S1: https://news.crunchbase.com/news/affirm-s1-ipo/

Affirm reported a net revenue of $509.5 million for the fiscal year that ended on June 30, 2020. That’s up nearly 93 percent from the same period in 2019.

More recently, the company reported net revenue of nearly $174 million for the three months that ended on September 30, 2020, up nearly 98 percent from the $87.9 million in revenue it generated during the same period the year prior.
...
In the “Risk Factors” section of its S-1, the company notes that Peloton was its top merchant partner, representing 28 percent of Affirm’s total revenue for the fiscal year ended June 30, 2020 and 30 percent of its total revenue for the three months that ended on Sept. 30, 2020.


So Peloton revenue for Affirm grew a little more than the 98% Affirm grew overall. But we don't know if the makeup of Peloton buyers has changed such that more or less are using Affirm. I don't think I can draw any meaningful conclusions from that information, at least not enough to be nearly as important as PTON basically saying they can't make and ship the devices fast enough. Plus, someone who is still paying off a bike is unlikely to cancel their subscription, so maybe it helps to lock in that subscription revenue.

While it's not great to have a constant backlog of orders and potentially losing customers, it's clearly better than sitting on a pile of unsold inventory. A certain car maker has done very well with a continuous stream of unfilled orders. And while some customers may be impatient and just move on to something else, the perceived scarcity could help the brand.
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No. of Recommendations: 2
In today's world of good equity returns and miniscule interest rates it might make better sense to not pay off purchases right away, and use the extra money to make more money. For instance I used to pay off mortgages early because being debt free made me feel good, purely psychological. But with even average long term returns of 9% or so in an index fund and a 3.5% mortgage rate does that make sense? Especially now that the interest may not be deductible. Of course there are the unknown risk factors involved in both cases. \
The deal is even better at 0% down and 0% interest as the Peloton Bike seems to be.
Is it correct that Affirm takes all the credit risk here?

The Peloton equipment seems to be sturdy and would have value after a repossession. Unlike money borrowed for a vacation..

a sign that PTON may have tapped out its market. maybe. But if so it will show up in revenue.
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No. of Recommendations: 3
In today's world of good equity returns and miniscule interest rates it might make better sense to not pay off purchases right away, and use the extra money to make more money. For instance I used to pay off mortgages early because being debt free made me feel good, purely psychological. But with even average long term returns of 9% or so in an index fund and a 3.5% mortgage rate does that make sense? Especially now that the interest may not be deductible. Of course there are the unknown risk factors involved in both cases. \
The deal is even better at 0% down and 0% interest as the Peloton Bike seems to be.
Is it correct that Affirm takes all the credit risk here?

The Peloton equipment seems to be sturdy and would have value after a repossession. Unlike money borrowed for a vacation..


According to this site: https://www.axios.com/affirm-lender-payday-peloton-a58c641b-...

Peloton paid Affirm more than $50 million just in the third quarter of this year. That more than makes up for the credit risk that Affirm is taking by lending to Peloton's customers.

So Affirm appears to take the credit risk in exchange for some percentage of sales. I agree that it makes sense to get 0% interest on large purchases. Plus, it's a good deal for customers otherwise paying for gym membership or spin classes. Instead of a $2000 up front investment, spend $100 a month for the bike plus subscription, and eventually get the bike paid off. Smart consumers will take advantage of free money. The next level, though, is that the consumer gets no rewards or credit card protection when buying through Affirm.

Back to whether Peloton has tapped out its market, hard to call that when there are still a lot of outstanding orders. They are still growing revenue sequentially and it's unlikely that they would hit a wall and suddenly saturate the market.
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No. of Recommendations: 1
Affirm is everywhere from Target to Best Buy to the small Shopify (I assume) customer from whom I ordered premium rollerblades from the other day instead of a Peloton. Hey, I figure I can stay in better shape roller skiing (it’s a Minnesota thing) but have not had a single person denounce Peloton to follow my lead.

The fact that Peloton actually grew its percentage w Affirm, given how fast they are growing seeems mathematically somewhat astounding. Not dispositive as there is an assumption made there but I think the assumption that Target Best Buy etc are very large customers as well for Affirm.

Tinker
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No. of Recommendations: 0
Affirm is also at Walmart Online I see. Affirm I believe IPOs in December and is from Max Levchin (of Paypal fame). Has Affirm been discussed as an investment here? I apologize if I missed it. I remember a similar company discussed here in the past (maybe a year ago) but I don't think it was Affirm.
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