The valuation at Peloton, the marketer of connected cycling equipment and subscriptions, is out of whack with the fitness industry, based on subscribers, and with tech majors, a note from Citron Research says.
The firm opened its research note with what it says is “the only chart that matters.”
Citron’s chart shows that Peloton’s enterprise value per subscriber is out of step with that of competitors like Fitbit (FIT) - Get Fitbit, Inc. Class A Report and Planet Fitness (PLNT) - Get Planet Fitness, Inc. Class A Report as well as non-competitors like Netflix, (NFLX) - Get Netflix, Inc. (NFLX) Report, Roku (ROKU) - Get Roku, Inc. Class A Report and Facebook (FB) - Get Facebook, Inc. Class A Report.
Peloton's EV per subscriber is $15,631, compared with $553 at Planet Fitness, $526 at Roku and $217 at Facebook.
Peloton’s 600,000 subscribers aren’t enough to support its current valuation, according to Citron.
The company couldn't immediately be reached for comment on the note.
“While Peloton has enjoyed a first-mover advantage, the lack of differentiation of its bike has finally caught up to it as the competition is not only making virtually identical exercise bikes but ones that are both more affordable and functional,” the Citron note said.
Second movers have features on their exercise machines – such as swivel screens, Netflix capabilities, open platforms -- that Peloton has yet to catch up with, the firm argues.
“Going forward, competition is so intense that some competitors are even offering to give the exercise bike for free with a digital subscription," the note said. Peloton’s "glory days of hardware sales are in the rear-view mirror.”
Peloton shares are down 6.5% to $32.50 Tuesday. The New York company in late September priced its initial public offering at $29. On Dec. 2 the stock touched a high above $37.