Peloton's Flat Tire

-Peloton's bike concept is no longer new and competition is bound to catch up.

-The flop of the Bike+ and Tread shows that users aren't willing to buy another bike when they already have one.

Peloton's profitability wasn't sustainable as it was driven by a short-term reduction in OPEX.

-Peloton is a one-product company because its Tread was a flop and its digital subscription was no better than free workout classes on YouTube.

-Peloton is overly reliant on hardware success.

The original hypotheses were valid

-Revenue Growth - The slowing growth of its subscription customers is driven by the slowing growth of hardware revenue. Bike unit sales have slumped considerably (around 75% YoY) compared to previous growth rates (200-300% YoY).

-Operating Expenses - Peloton's short-term profitability during COVID was driven by a temporary decrease in OPEX. Now that OPEX is back to 59% of revenue, it creates a large decline in net profit.

-Cost - Treadmill recalls have increased per-unit cost by around 10%.