We feel now is a pretty good time to analyse Peloton Interactive, Inc.'s (NASDAQ:PTON) business as it appears the company may be on the cusp of a considerable accomplishment. Peloton Interactive, Inc. provides interactive fitness products in North America and internationally. The US$26b market-cap company announced a latest loss of US$189m on 30 June 2021 for its most recent financial year result. As path to profitability is the topic on Peloton Interactive's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Peloton Interactive is bordering on breakeven, according to the 28 American Leisure analysts. They expect the company to post a final loss in 2023, before turning a profit of US$74m in 2024. Therefore, the company is expected to breakeven roughly 3 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 49% is expected, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Peloton Interactive's growth isn’t the focus of this broad overview, but, bear in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we would like to bring into light with Peloton Interactive is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Peloton Interactive's case is 47%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on Peloton Interactive, so if you are interested in understanding the company at a deeper level, take a look at Peloton Interactive's company page on Simply Wall St. We've also compiled a list of key factors you should look at:
- Valuation: What is Peloton Interactive worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Peloton Interactive is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Peloton Interactive’s board and the CEO’s background.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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