Are you ready to ride the Peloton wave to potential profits? Greenlight Capital’s David Einhorn certainly thinks so. In a recent presentation at the Robin Hood Investors Conference, Einhorn outlined his bullish thesis on Peloton, suggesting that the stock could soar to $31.50 a share if the company makes significant cost cuts.
But what sets Peloton apart from its competitors? Einhorn points to Peloton’s high-margin subscription business, which generated over $1.71 billion in revenue in fiscal 2024 with a gross margin of 68%. By making deep cost cuts and focusing on its subscription revenue base, Peloton could significantly boost its free cash flow and EBITDA without needing to sell more equipment or grow its subscriber base.
One of the key drivers behind Einhorn’s thesis is the potential for Peloton to generate $450 million in EBITDA, double its current projections. This could place the stock in the $7.50 to $31.50 range, based on a benchmark study of comparable companies. And with Peloton already implementing cost-saving initiatives like layoffs and showroom closures, the path to profitability looks promising.
But it’s not just about the numbers for Peloton. Einhorn emphasizes the importance of new management to drive the company forward. With interim co-CEOs at the helm, there’s anticipation for a new top executive to lead Peloton to even greater success.
So why should investors pay attention to Einhorn’s bullish outlook on Peloton? With a loyal customer base, strong subscription revenue, and a growing trend towards home fitness, Peloton could be a promising investment opportunity in the fitness sector.
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