Peloton’s U-Turn After Total Botch
Behind Peloton's a bad quarter.
Today is Friday, November 5, 2021.
Peloton’s U-Turn After Total Botch in the Quarter
Shares of Peloton (Nasdaq: PTON) dropped 30.17% in after-hours trading on Thursday after the exercise equipment company posted really bad earnings.
Numbers: Peloton was expected to report earnings of over $1 per share; instead the company reported a loss of $1.25 per share. Its revenue of $805 million was also under expectations.
Going Backwards: During the quarter, gross profit reached $262 million, which is a 20% year-over-year decline. The connected fitness segment's gross profit was $60 million, which was a 75% decline.
Background: The company attributed the terrible quarter to its August plan to reduce bike prices, supply chain issues, and the recall of its treadmill product.
Opportunity: In the earnings release, the company wrote that there is a “lingering perception that Peloton is a luxury item.” Peloton wants to increase marketing in order to change that perception. By lowering its prices, Peloton is now changing its target audience by going after “less affluent customers.”
Quote: “We remain convinced that the growth opportunity for Peloton is substantial and this informs our decision to prioritize accessibility and household acquisition over near-term profitability.” - Peloton's statement to shareholders.
Final Thoughts: The company has $924 million cash on hand, which can be used to market to this new customer segment.
Notable Earnings Today: DraftKings (Nasdaq: DKNG), Honda Motor (NYSE: HMC), Goodyear Tire & Rubber (Nasdaq: GT).
Notable IPOs Today: Cian PLC (NYSE: CIAN), Desert Peak Minerals Inc. (NYSE: DPM), Real Good Food Company, Inc. (Nasdaq: RGF), CIIG Capital Partners II, Inc. Class A Common Stock (Nasdaq: CIIG), Mainz Biomed B.V. Ordinary Shares (Nasdaq: MYNZ), IO Biotech, Inc. Common Stock (Nasdaq: IOBT), BioRestorative Therapies, Inc. Common Stock (Nasdaq: BRTX),
Notable Equity Crowdfunding Campaigns Ending Today: Cava Health (Wefunder), Raindrop Texting Solutions (TruCrowd), Exit 6 (Fundanna), Clara B’s Kitchen Table (MainVest).
Notable Economic Events Today: Initial jobless claims (8:30 a.m. ET), Exports and imports (8:30 a.m. ET).
Investors Weigh Pros and Cons of Teladoc
When people think of telehealth, Teladoc Health (NYSE: TDOC) usually comes to mind. It is a giant in the telehealth field.
Numbers: In the past five years, shares of Teledoc are up over 700%, which is due largely to the overall adoption of telehealth since the pandemic. However, shares are down 25% in 2021.
The Good: Teledoc recently released its earnings. The company’s revenue of $521 million is up 81% year-over-year. Recent acquisitions have also been good for the company.
The Bad: Teladoc is still not profitable. The company’s expenses have skyrocketed in the past year.
Final Thoughts: There are a lot of things to consider before investing in Teladoc. It is a good way to get exposure to the growing telehealth market, but it is not the only way to do so.
Why a Spot Bitcoin ETF Might Be Better Than Bitcoin Futures
Bitcoin could replace gold exchange-traded funds (ETFs) and outpace the SPDR S&P 500 ETF Trust if there was a spot Bitcoin ETF, MicroStrategy CEO Michael Saylor said during the Bloomberg Financial Innovation Summit on Thursday.
Quote: “And once these spot ETFs roll, I think you’ll see billions, then tens of billions, then hundreds of billions, then trillions of dollars flow into them.” - Michael Saylor
Background: A pair of Bitcoin futures ETFs began trading in October. Bitcoin futures is a derivative product. A spot Bitcoin ETF tracks the actual price of Bitcoin. It allows investors to get exposure to the asset without actually owning it.
What the Expert Says: Saylor said on Thursday that Bitcoin futures are “inferior.”
Final Thoughts: A spot Bitcoin ETF probably won’t get approved by the U.S. Securities and Exchange Commission until 2022.
Trends to Watch
Cool to Be a Nerd: NerdWallet soars 91% in IPO debut, valuing the personal finance website at $2 billion (Insider)
Stuck in Traffic: Uber Q3 loss widens on investment losses, revenue up 72% (ABC News)
Rally On: Ether to Extend Outperformance Versus Bitcoin Following Recent Breakout, FSInsight Says (CoinDesk)
Breath of Fresh Airbnb: Airbnb profits surge 280% in third quarter (CNBC)
Dropped Call: AT&T, Verizon to Delay 5G Rollout Over FAA’s Airplane Safety Concerns (The Wall Street Journal)
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