WEBVTT

00:00:00.000 --> 00:00:05.040 align:middle line:84%
Peloton has garnered interest
from apple, Amazon and Nike,

00:00:05.040 --> 00:00:08.800 align:middle line:84%
all based on reports, but who
should Peloton really go to?

00:00:08.800 --> 00:00:11.370 align:middle line:84%
Joining me today, I've got
Chris Versace, portfolio manager

00:00:11.370 --> 00:00:12.130 align:middle line:90%
of Action Alerts.

00:00:12.130 --> 00:00:14.550 align:middle line:84%
Plus, Chris, you wrote
in your morning notes

00:00:14.550 --> 00:00:16.120 align:middle line:90%
to members of Action Alerts.

00:00:16.120 --> 00:00:19.740 align:middle line:84%
Plus that you like
Amazon the best correct?

00:00:19.740 --> 00:00:21.550 align:middle line:84%
Yeah, that is absolutely
true, Catherine.

00:00:21.550 --> 00:00:23.410 align:middle line:84%
I mean, look, we'll
see what happens.

00:00:23.410 --> 00:00:25.430 align:middle line:84%
You know, there's a lot
of speculation on this.

00:00:25.430 --> 00:00:27.270 align:middle line:84%
You know, I think
anybody who invests

00:00:27.270 --> 00:00:30.810 align:middle line:84%
on speculation of deals,
it's a dicey thing at best.

00:00:30.810 --> 00:00:33.813 align:middle line:84%
Having said that, though, if
we evaluate the three of them,

00:00:33.813 --> 00:00:35.730 align:middle line:84%
I know a lot of people
are out there thinking,

00:00:35.730 --> 00:00:38.250 align:middle line:84%
oh, Apple's got the
cash, they have fitness,

00:00:38.250 --> 00:00:40.350 align:middle line:84%
plus they have the
Apple watch, it

00:00:40.350 --> 00:00:43.320 align:middle line:84%
all kind of ties together
kind of nicely, sort of

00:00:43.320 --> 00:00:44.580 align:middle line:90%
is my answer.

00:00:44.580 --> 00:00:48.180 align:middle line:84%
You know, I think when we
examine how Peloton actually

00:00:48.180 --> 00:00:51.720 align:middle line:84%
brings its products to the
customers has to install them

00:00:51.720 --> 00:00:54.430 align:middle line:84%
that home delivery,
home pickup angle.

00:00:54.430 --> 00:00:57.370 align:middle line:84%
I think it's a little bit much
for Apple to move into that.

00:00:57.370 --> 00:00:59.650 align:middle line:84%
It's not anything
they've ever been into.

00:00:59.650 --> 00:01:03.090 align:middle line:84%
They do prefer to have a lot
more control over the consumer

00:01:03.090 --> 00:01:04.660 align:middle line:90%
experience in that regard.

00:01:04.660 --> 00:01:08.190 align:middle line:84%
However, if you look at Amazon,
which of course, has been

00:01:08.190 --> 00:01:10.200 align:middle line:84%
building out its
prime delivery fleet,

00:01:10.200 --> 00:01:12.780 align:middle line:84%
they also have
Amazon home services

00:01:12.780 --> 00:01:15.180 align:middle line:84%
and they have
their own wearable.

00:01:15.180 --> 00:01:18.120 align:middle line:84%
I believe the Amazon halo
band, as it's called,

00:01:18.120 --> 00:01:20.160 align:middle line:84%
those are all reasons
to think, as well as

00:01:20.160 --> 00:01:24.450 align:middle line:84%
its ample cash on hand that
Amazon is not only a likely

00:01:24.450 --> 00:01:27.840 align:middle line:84%
buyer, but of the three
probably the one that

00:01:27.840 --> 00:01:31.310 align:middle line:84%
sees Peloton fitting the most
inside of its existing business

00:01:31.310 --> 00:01:31.810 align:middle line:90%
model.

00:01:31.810 --> 00:01:34.185 align:middle line:84%
So for that reason, if I had
to roll the dice, Catherine,

00:01:34.185 --> 00:01:36.810 align:middle line:90%
I think it's Amazon.

00:01:36.810 --> 00:01:40.380 align:middle line:84%
Well, Dan Ives likes
Apple the best candidly,

00:01:40.380 --> 00:01:43.830 align:middle line:84%
but he also sees a $12
billion to a $15 billion

00:01:43.830 --> 00:01:45.220 align:middle line:90%
valuation for Peloton.

00:01:45.220 --> 00:01:47.400 align:middle line:90%
Do you agree with that?

00:01:47.400 --> 00:01:50.280 align:middle line:84%
Look, I think like
anything else,

00:01:50.280 --> 00:01:53.022 align:middle line:84%
when we see a stock crater,
the first reaction is, oh,

00:01:53.022 --> 00:01:54.730 align:middle line:84%
they're going to pick
it up on the cheap.

00:01:54.730 --> 00:01:56.700 align:middle line:84%
But I think if you take
a look at what Peloton

00:01:56.700 --> 00:01:59.730 align:middle line:84%
has going for it in
terms of its, you know,

00:01:59.730 --> 00:02:03.720 align:middle line:84%
arguably sticky consumer base
that simply loves the product.

00:02:03.720 --> 00:02:07.950 align:middle line:84%
Prospects to add incremental
products to the Tread

00:02:07.950 --> 00:02:10.043 align:middle line:84%
and to the bike,
perhaps a rower.

00:02:10.043 --> 00:02:12.210 align:middle line:84%
You know, I think there's
room to grow the business,

00:02:12.210 --> 00:02:15.030 align:middle line:84%
so I wouldn't be surprised
if the valuation is

00:02:15.030 --> 00:02:19.270 align:middle line:84%
a little closer to what Dan
Ives is thinking than not.

00:02:19.270 --> 00:02:21.610 align:middle line:84%
And finally, Chris, one
thing that always stood out

00:02:21.610 --> 00:02:25.360 align:middle line:84%
to me with Pelton, especially
after numerous interviews

00:02:25.360 --> 00:02:27.408 align:middle line:84%
with their management,
was the fact

00:02:27.408 --> 00:02:29.200 align:middle line:84%
that Peloton can be a
little bit exclusive.

00:02:29.200 --> 00:02:32.350 align:middle line:84%
It can be for the
higher end of clientele.

00:02:32.350 --> 00:02:34.000 align:middle line:84%
But if Amazon were
to buy it, do you

00:02:34.000 --> 00:02:36.740 align:middle line:84%
think that they could make it
perhaps bring down the price?

00:02:36.740 --> 00:02:37.810 align:middle line:84%
This is all
speculation, of course,

00:02:37.810 --> 00:02:39.643 align:middle line:84%
but perhaps they could
bring down the price,

00:02:39.643 --> 00:02:43.010 align:middle line:90%
make it more widely bought.

00:02:43.010 --> 00:02:45.420 align:middle line:84%
Similar, I think you're kind
of referring to a strategy

00:02:45.420 --> 00:02:47.420 align:middle line:84%
that they did when they
bought Whole Foods where

00:02:47.420 --> 00:02:50.240 align:middle line:84%
they kind of, I won't say,
widened out the prices,

00:02:50.240 --> 00:02:51.000 align:middle line:90%
but they made.

00:02:51.000 --> 00:02:53.600 align:middle line:84%
They certainly helped
remove the stigma

00:02:53.600 --> 00:02:55.580 align:middle line:84%
at Whole Foods known
as whole paycheck

00:02:55.580 --> 00:02:57.820 align:middle line:84%
in order to go buy a
bag of groceries there.

00:02:57.820 --> 00:02:58.520 align:middle line:90%
So I do.

00:02:58.520 --> 00:02:59.640 align:middle line:90%
I think that's possible.

00:02:59.640 --> 00:03:01.820 align:middle line:90%
I think it is, Catherine.

00:03:01.820 --> 00:03:03.350 align:middle line:84%
You have to remember
too, though,

00:03:03.350 --> 00:03:05.540 align:middle line:84%
that the Peloton folks
have been also trying

00:03:05.540 --> 00:03:09.170 align:middle line:84%
to figure out ways to bring more
affordable products to market

00:03:09.170 --> 00:03:12.740 align:middle line:84%
rather than just that premium
bike and premium Tread

00:03:12.740 --> 00:03:13.470 align:middle line:90%
that they have.

00:03:13.470 --> 00:03:15.860 align:middle line:84%
And I suspect there are
plans afoot and certainly

00:03:15.860 --> 00:03:17.660 align:middle line:84%
whoever acquires
them, if it is Amazon

00:03:17.660 --> 00:03:21.900 align:middle line:84%
or whoever else, I'm sure
they can leverage that.

00:03:21.900 --> 00:03:24.480 align:middle line:84%
All right, Chris, thank you for
not only speculating with me,

00:03:24.480 --> 00:03:27.330 align:middle line:90%
but on taking all my questions.

00:03:27.330 --> 00:03:29.060 align:middle line:90%
Sure thing.

00:03:29.060 --> 00:03:34.000 align:middle line:90%