Peloton Interactive PTON
Peloton's overlooked subscription business — 68% gross margins, 1.5% churn — can deliver $400-500M EBITDA once costs are right-sized, implying a $7.50-$31.50 share price versus $5.48 today.
Thesis
Peloton Interactive, once a $49 billion COVID darling, was left for dead after founder John Foley's growth-at-all-costs vision saddled the company with in-house manufacturing, dozens of retail showrooms, 90th-percentile compensation and an expense base disconnected from demand; the stock bottomed at $2.70 in May 2024 and trades at $5.48 today. Greenlight argues the underlying business — 3 million loyal subscribers paying $44 per month, with 68% subscription gross margins and industry-leading 1.5% monthly churn — is a durable franchise hidden beneath a broken cost structure. Benchmarking against Life Time, Planet Fitness, Revolve, Chewy, Spotify, Match, Netflix and Adidas shows SG&A at 99.7% of gross profit versus a 60% peer median and stock-based comp of $305 million, comparable to companies 30-140 times larger. A right-sized Peloton should deliver $400-500 million in EBITDA, implying a $7.50-$31.50 share price at 9-32x peer multiples.
SCQA
Peloton is the largest interactive fitness platform, with 3 million subscribers paying $44/month, 68% subscription gross margins and 1.5% monthly churn — stronger retention than Netflix, Spotify or SiriusXM after a 95% stock collapse from pandemic peaks.
Founder John Foley's growth-at-all-costs pandemic playbook left Peloton with in-house manufacturing, excess retail showrooms, 90th-percentile compensation and $305M of stock-based comp; SG&A is now 99.7% of gross profit versus a 60% peer median.
A new permanent CEO — currently being recruited — must finish right-sizing the cost base, outsource what Foley in-sourced, cut SBC toward peer levels and run Peloton as the durable high-margin subscription franchise it actually is.
A right-sized Peloton delivers $400-500 million of EBITDA; at 9-32x multiples of comparable subscription businesses, the stock is worth $7.50-$31.50 versus $5.48 today — roughly 1.4x to 5.7x upside.
The three reasons
- 1
Subscription business has 68% gross margins and 1.5% monthly churn — better than Netflix, Spotify and SiriusXM
- 2
Cost structure is broken: SG&A is 99.7% of gross profit vs. 60% peer median; SBC rivals Spotify and Netflix
- 3
A right-sized Peloton generates $400-500M EBITDA, worth $7.50-$31.50/share at 9-32x vs. $5.48 today
Primary demands
- Right-size cost structure to peer benchmarks (especially SG&A and R&D)
- Cut stock-based compensation from 11.3% of sales toward peer median (1.7%)
- Hire a permanent CEO focused on the durable subscription model, not revenue growth
- Reverse Foley-era vertical integration and continue outsourcing manufacturing/distribution
KPIs cited
Pattern membership
Where this document fits across the library's 12 rhetorical / structural patterns.
Precedents cited
- Netflix (Barry McCarthy's prior CFO tenure as subscription-model template)
- Spotify (Barry McCarthy's prior CFO tenure as subscription-model template)
Notable slides (6)
Notes
Exceptionally creative framing: the entire 30-page deck is styled as a 15-minute Peloton workout class UI — every slide has the Peloton progress bar, cadence/watts/resistance stats, and a leaderboard with the audience (Ackman, Loeb, etc.) as riders. Delivered at Robin Hood Investors Conference Oct 23, 2024. Einhorn himself 'teaches' the class while pitching. One-page cartoons (CartoonStock) punctuate transitions. Not a classic activist campaign — no board demand, no proxy fight — but a long-equity contrarian pitch arguing the market has left a durable subscription franchise for dead. Stake is disclosed only qualitatively ('Peloton is in Greenlight's portfolio today'); no percentage given. Visual craft is genuinely stealable for narrative design; substance is standard peer-benchmarking plus rerate-math.