Stefan Culibrk of Highway One Asset Management presented his investment thesis on Peloton Interactive (US: PTON) at Wide-Moat Investing Summit 2021.

Thesis summary:

Peloton is a vertically integrated media company operating in the at-home fitness industry. The company makes, markets, retails, and delivers high-end bikes and treadmills. The secret sauce is in the integration of hardware, software, and content: Peloton produces engaging boutique fitness content streamed on and off the devices.

In this session, Stefan compares Peloton to Planet Fitness (US: PLNT) and shows that Peloton’s offering has clear advantages in terms of results, cost, and the user experience versus a low-cost physical gym membership.

The founders started the company in New York City in 2012 and still run it. Stefan believes that the management team is focused on the right KPIs and that it passed an important test during the recent recall.

Over the next decade, Stefan sees potential for 30 million subscriptions and 60 million members (halfway to gym penetration), up from 4.5 million members recently. This would result in an estimated gross profit of $20 billion and operating profit of $10 billion, supporting an attractive long-term return.

Stefan started the session with an update of his investment thesis on Interactive Brokers (US: IBKR), which he had originally presented in July 2020.

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About the instructor:

Stefan Culibrk co-founded Highway One Asset Management in 2019, with a goal of achieving a superior long-term rate of return on capital. Previously, Stefan served as managing partner of Culibrk Partnership. Before that, he was employed by Bank of America Merrill Lynch, London, an investment bank, where he was trading emerging market equities from 2013 to 2014. Prior to joining the equities division, Stefan interned in the foreign exchange trading department in 2012. Stefan received a Master in Finance degree from the IE Business School, Madrid, in 2012. He has been a CAIA charterholder since 2010.

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