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PELOTON MIGHT BE BACK 👀

| news sentiment: 🟢 | high news volume🔥 | earnings beat 🗓️

Well well well… the butt of basically every r/wallstreetbets meme of the past 2 years may be rising from the ashes ladies & gents.

Peloton reported its Q4 earnings yesterday before markets opened, and to say the least, the people are surprisingly hyped about it. Here’s the quick break down:

• Subscriptions: after tanking as a luxury, product-oriented exercise equipment company in 2021, Peloton has shifted focus over the past year to emphasis a more affordable content subscription model — and it seems to be working. Its subscription revenues have beat equipment revenues now for 3 straight quarters.

• Earnings: on the back of its subscription model, the company’s net losses have narrowed considerably over the past year from -439.4M in Q4 2021 to -$335.4M in Q4 2022 (a 24% reduction). That said, the company has yet to turn a profit since 2020.

• Tipping Point: new-ish CEO Barry McCarthy (who’s a former Spotify & Netflix executive) is bullish on Peloton’s turnaround strategy, & is calling this quarter’s results a possible ‘tipping point’ for the beaten down company.

Keep in mind here, Peloton’s stock price is still ~90% below its all-time high from back in December 2020 (back when at-home exercise was a HOT commodity during the pandemic), and the company still has a lonngg way to go before consistent profitability is realistic…

BUT, the fact that its highly-touted subscription strategy is treading in the right direction seems to be a strong positive for investors. 🤷

You know the scene from Dumb and Dumber when they get stranded in Nebraska and all hope seems lost, then Lloyd trades the Shaggin’ Wagon for a vespa to get them back to Aspen and save the day? and Harry says “you know, Lloyd, just when I think you couldn't possibly be any dumber, you go and do something like this... and totally redeem yourself!”

It’s kinda like that.

PELOTON’S SENTIMENT ON THE RISE

Aside from the sheer numbers & commentary in Peloton’s quarterly report, the BIGGER story here is how folks are reacting to it all.

After the Q4 call, PTON stock price jumped +25% throughout the day — a clear sign that investors were just waiting for any sign of life out of the company before piling back on.

And looking at Peloton’s news sentiment, the story holds. PTON’s cumulative day-over-day news sentiment has risen from the ashes over the past six months, particularly on Twitter where traders have become increasingly ecstatic about its future prospects (more info here). 👇

Overall, Peloton’s day-over-day sentiment has climbed +78% since its 6-month low back in mid-October, and continues to trend higher.

Whether or not you believe in the hype, Peloton’s making a comeback right now. This could truly be an inflection point for the stock — carried by the momentum of its retail investor believers — or just a blip on its path to breaking more hearts like it did in 2022.

Either way, I’m sure it’ll be entertaining. 🍿

NEWS NUGGETS🥔

Top trending commentary parsed from news coverage

Bullish News Snippets

🟢 | 📰 Zacks | 🗣️ Starbucks’ estimates rise heading into earnings…

“Analysts raising estimates right before earnings — with the most up-to-date information possible — is a pretty good indicator of some favorable trends underneath the surface for SBUX in this report.”

🟢 | 📰 MotleyFool | 🗣️ analysts are bullish on Roblox’s user growth…

“Roblox only went public in 2021, which may lead some to wrongly assume the platform is still quite small. In reality, the platform has 61.5 million daily active users (DAUs) as of the end of December… it’s certainly proving to be a resilient business”

Bearish News Snippets

🔴 | 📰 MarketWatch | 🗣️ Electronic Arts falls hard on earnings disappointment…

“Electronic Arts stock on track for worst decline of pandemic as 'rare' disappointment resets expectations. EA shares, which fell as much as 14% to an intraday low of $112.80, finished down 9.3% at $116.76, for their worst one-day percentage drop since Feb. 6, 2019, when they closed down 13.3%, according to FactSet data.”

🔴 | 📰 GlobalNewsWire | 🗣️ Affirm subjected to shareholder class action lawsuit…

“[Affirm] made materially false and misleading statements throughout [2021]. Plaintiff alleges that [Affirm] failed to disclose that: (i) Affirm’s BNPL service facilitated excessive consumer debt, regulatory arbitrage, and data harvesting; and (ii) the foregoing subjected Affirm to a heightened risk of regulatory scrutiny and enforcement action.”

Other Big Earnings This Week

🟢  | 📰 InvestorPlace | 📆 Apple reports earnings today after close

“Bulls argue that the company’s robust balance sheet, high-margin Services unit and holiday quarter will be enough for the company to power higher on earnings. On the upside, bulls need to see Apple clear the recent high near $147, then resistance near $150.”

🟢 | 📰 MotleyFool | 📆 Amazon reports earnings today after close

“Amazon is currently valued at a little over 9 times Wall Street's forecast cash flow in 2025. As AWS, advertising services, and subscription services grow into a larger percentage of Amazon's total sales, the company's operating cash flow can skyrocket. That makes it an intriguing value right now.”

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1. Incredible 🔥🔥🔥🔥🔥

2. Considerably decent 😺😺😺

3. Not your best bro 👎

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.

SENTIMENT KEY: 🟢=bullish, 🌑=neutral, 🔴=bearish