Here I am going to make an attempt to derive the intrinsic value of Peloton Interactive, Inc - an American exercise equipment and a media company that this week listed in an IPO on Nasdaq.
The market currently values Peloton Interactive at 7.011 bln. USD. Is this valuation justified?
I think it is a little high.
I estimate Peloton Interactive is worth around 5 billion USD. Why? Because Peloton Interactive is simply not profitable to justify a valuation of Price-to-Sales ratio of 7.66.
Peloton Interactive achieved 915 mln. USD revenue in its last fiscal year, which compares to 435.1 mln. USD - last fiscal year's Peloton Interactive's revenue, which amounts to 110% revenue growth. That spectacular revenue growth came at a high cost, though. Peloton Interactive's fiscal year loss grew significantly from 47.9 mln. USD in fiscal year 2018 to 195.6 mln. USD in fiscal year 2019, which basically means Peloton Interactive is losing almost 1.2 USD on every 1 USD in revenue it makes.
Simply because of the large losses Peloton Interactive is not worth its current 7.011 bln. USD valuation. I would say currently Peloton Interactive is worth around 5 billion USD. This, of course, is based on its performance of up to date and in the near future. If in the next 2-3 years Peloton Interactive continues to grow revenue by around 50% year on year and gets closer to profitability or even becomes profitable, then Peloton Interactive may well be worth much more than my current estimate of 5 billion USD.
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Petar
Vladimirov Posledovich is not liable for any investment losses incurred
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Petar Posledovich
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