Equity Analyst, LightStream Research

Aqila Ali

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Capital Markets

Peloton Interactive  / Equity Capital Markets

<p>In our earlier report, we covered <a href="https://www.smartkarma.com/entities/peloton-interactive-inc" target="_blank" data-smartkarma-citation="entities:28014:1" rel="noopener">Peloton Interactive (PTON US)</a>’s background, its business model, the growth prospects and risks it faces in the market. We concluded that the company is in the early stages of growth, but its current business model does not appear sustainable or capable of continued double-digit growth levels. Peloton announced last Tuesday that it aims to raise around USD1.16bn or more, offering 40 million Class A shares between a low-end price of USD26 and a high-end price of USD29 each. This insight covers the financial performance of the company and its valuation. Our views are:</p>
<ul>
<li>Although we have provided a financial outlook and valuation, we note that the financial figures may not be relied upon due to the company’s internal control deficiencies.</li>
<li>Revenue has shown significant growth over the last three years, but whether growth will continue over the mid to long term continues to be a concern.</li>
<li>Revenue was looked at in two possible scenarios, based on Peloton’s ability to secure demand for its bikes and keep users engaged with its app. We see that even in the best-case scenario the company would still seem expensive on EV/sales trading significantly above its appropriate peers.</li>
<li>Peloton’s path to profitability is unclear even in a best-case scenario for revenue, raising the question of whether a premium is justifiable for a loss-making firm with doubts on demand continuity.</li>
<li>We would not subscribe to this expensive issue, as the investment also requires a high tolerance for risk and volatility</li>
</ul>

In our earlier report, we covered Peloton Interactive (PTON US)’s background, its business model, the growth prospects and risks it faces in the market. We concluded that the company is in the early stages of growth, but its current business model does not appear sustainable or capable of continued double-digit growth levels. Peloton announced last Tuesday that it aims to raise around USD1.16bn or more, offering 40 million Class A shares between a low-end price of USD26 and a high-end price of USD29 each. This insight covers the financial performance of the company and its valuation. Our views are:

Although we have provided a financial outlook and valuation, we note that the financial figures may not be relied upon due to the company’s internal control deficiencies.
Revenue has shown significant growth over the last three years, but whether growth will continue over the mid to long term continues to be a concern.
Revenue was looked at in two possible scenarios, based on Peloton’s ability to secure demand for its bikes and keep users engaged with its app. We see that even in the best-case scenario the company would still seem expensive on EV/sales trading significantly above its appropriate peers.
Peloton’s path to profitability is unclear even in a best-case scenario for revenue, raising the question of whether a premium is justifiable for a loss-making firm with doubts on demand continuity.
We would not subscribe to this expensive issue, as the investment also requires a high tolerance for risk and volatility


Peloton IPO (Part 2): Pedalling Furiously to Go Nowhere

Taiwan

Johnson Health Tech Co., Ltd. manufactures and markets a variety of fitness equipment for institutional club as well as home use.  The Company's products include treadmills, ellipticals, air rowers, recumbents, uprights, and steppers. Johnson Health Tech has distributors worldwide.

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Johnson Health Tech (1736 TT)

Peloton IPO (Part 2): Pedalling Furiously to Go Nowhere

In our earlier report, we covered Peloton Interactive (PTON US)’s background, its business model, the growth prospects and risks it faces in the...

Aqila Ali

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