i dont think you use a proper math funnel though. Instead of just SBC & R&D, you should look at total expense cut (these 2 only to make a point). Now Quarter OP is 40mn, mean a cut of 70mn to achieve 110mn Quarter OP, 70mn out of 260mn OPEX is 30% OPEX cut, not impossible & this is OP not EBITDA.
Of course maybe cant cut tht much without impacting loyalty or growth, but the math is easily workable.
Yes but if you look at the components of OPEX, SG&A make up by far the largest cost components. Also, Einhorn's own valuation is based on EBITDA, not OP or NP.
Really interesting analysis and critique of Einhorn's PTON thesis. Your focus on cost cutting measures present a clear picture PTON has a lot more to do to justify the proposed $31.50 share price. But I do believe can increase subscription prices. With multiple subscription offerings across its products and low churn rates (monthly churn ~2%) customers would be willing to pay extra to keep using PTON's products especially due to how expensive the equipment can be the cost of not using a 3000 bike seems a lot more than just paying a $44 dollar subscription maybe even a $60 or $70 subscription.
Yes the main issue is with the valuation. It truly sounds like a reverse margin of safety situation. Also, Einhorn mentioned he didn't bake price increases nor volume increases in his thesis; it's supposedly purely about cost cutting. I just don't see how that happens.
i dont think you use a proper math funnel though. Instead of just SBC & R&D, you should look at total expense cut (these 2 only to make a point). Now Quarter OP is 40mn, mean a cut of 70mn to achieve 110mn Quarter OP, 70mn out of 260mn OPEX is 30% OPEX cut, not impossible & this is OP not EBITDA.
Of course maybe cant cut tht much without impacting loyalty or growth, but the math is easily workable.
Yes but if you look at the components of OPEX, SG&A make up by far the largest cost components. Also, Einhorn's own valuation is based on EBITDA, not OP or NP.
Really interesting analysis and critique of Einhorn's PTON thesis. Your focus on cost cutting measures present a clear picture PTON has a lot more to do to justify the proposed $31.50 share price. But I do believe can increase subscription prices. With multiple subscription offerings across its products and low churn rates (monthly churn ~2%) customers would be willing to pay extra to keep using PTON's products especially due to how expensive the equipment can be the cost of not using a 3000 bike seems a lot more than just paying a $44 dollar subscription maybe even a $60 or $70 subscription.
Yes the main issue is with the valuation. It truly sounds like a reverse margin of safety situation. Also, Einhorn mentioned he didn't bake price increases nor volume increases in his thesis; it's supposedly purely about cost cutting. I just don't see how that happens.