Loup Funds analysts Gene Munster, Doug Clinton, and Andrew Murphy discussed Peloton Interactive Inc’s PTON attempts to “steady the ship” as the fitness equipment maker undergoes a leadership change.
What Happened: Clinton said that when a high-growth company like Peloton stumbles, it is hard to get back on track. He said that Peloton’s story was not fully written yet.
The Loup analyst said that adding former CFO of Netflix Inc NFLX Barry McCarthy as the new CEO won’t be “easy” even though you couldn’t think of a “better operator.” Munster concurred that McCarthy was a “great hire.”
Munster noted the internal rifts within the company that led to leaks that gave the broader media an opportunity to “feast on.”
The analyst disagreed with a CNN headline that described Peloton as “toast.”
He noted that it still had a very loyal base, and a high retention rate but noted that it does not make sense for Loup to invest in the exercise bike maker because there’s “a dynamic where we shoot for something different.”
Munster touched on what he called “generational companies” and asked Clinton to define them, which he said Peloton wasn’t.
Clinton said he liked to define such companies as ones that make products that everyone can use in the next ten years. He cited the examples of Apple Inc AAPL, Netflix, and Amazon.com, Inc AMZN as being such companies.
See Also: How To Buy Peloton (PTON) Shares
Why It Matters: Clinton said, while Peloton does have a good product and there are people who passionately love it, he cannot fast forward 10 years from now and without laughing say “you know everybody should have a Peloton.”
Munster said he suspects Peloton will stick to their higher-end product and they are going to have to evolve.
“I don't think it's going to be anchored in the bike, for example, in five or ten years,” said Munster.
On Tuesday, it was announced that Peloton CEO John Foley will be stepping down and move on to become executive chair. The company announced plans to cut 2,800 jobs in order to mitigate widening loss.
Price Action: On Tuesday, Peloton shares soared 25.3% to $37.27 in the regular session and rose another 3.8% to $38.67 in the after-hours trading.
Read Next: Why This Expert Thinks Apple Will Never Acquire Peloton: 'Unnecessary And Pricy Headache'
Photo: Courtesy of Peloton
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