#95 -Peloton and the Power of Community As A Service
In this week's episode of Reformed Millennials, Broc and Joel change things up and talk about one of the most infamous work from home stocks - $PTON. This is an exercise in portfolio management and idea generation. Tune in if you want to see whether PTON would make it into an RM model portfolio.
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Indices: US Stocks were little changed to start the week. The Dow inched higher by 46 points or 0.13%. The S&P 500 and Nasdaq both closed flat (0.05% and 0.09%). The Russell 2000 notably outperformed, rising 1.14%.
Sectors: 6 of the 11 sectors closed higher. Energy led by a wide margin, gaining 3.85%. Health Care lagged, falling 1.64%.
Commodities: Crude Oil futures rose 2.11% to a new 52-wk high of $67.72 per barrel. Gold futures were unchanged and continue to trade at $1,905 per ounce.
Currencies: The US Dollar Index inched higher by 0.10%.
Interest Rates: The 10-year US Treasury yield rose to 1.610%.
🚲PTON and the Power of Community
With the sole mission of helping people embrace fitness into their lives, Peloton is the leading connected fitness company in the world. A best-in-class user experience with aligned incentives, a visionary management team, and a multidecade transition towards connected fitness will help Peloton change the habits of millions of people over the next decade.
According to the WHO, there has been no improvement in global levels of physical activity since 2001, and "insufficient activity increased by 5% (from 31.6% to 36.8%) in high-income countries between 2001 and 2016". Structural trends like videogames and passive content consumption along with remote working or food delivery will only exacerbate the lack of activity over the next decades.
Exercise is hard to maintain and with increasing levels of convenience, humans tend to inactivity and sedentary behaviors. According to the CDC (Centers for Disease Control and Prevention), roughly 53% of all U.S. adults met the Physical Activity Guidelines for aerobic activity while only 23% met both the aerobic and muscle-strengthening guidelines. Against this backdrop, caloric intake has steadily increased over the past decades from 2052 daily calories in 1965 to 2850 in 2015 ( developed countries), and “the average American consumes more than 3,600 calories daily – a 24% increase from 1961 when the average was just 2,880 calories", this has resulted into a new pandemic for which there is not a quick fix. Obesity levels have hit an all-time high and according to the CDC, more than 42% of adults aged over 20 and 1 out of 5 children are obese in the USA.
Listen to the episode fully for more!
RM PTON score card: 33.4/50
Intangibles, brand - 8.9/10
Community or network effects - 8/10
Business model - 6.5/10
Team (corporate culture) - 4/10
Wave (opportunity for stock growth) - 6/10
💸Reformed Millennials - Post of The Week
The AR/VR space is heating up and android/iOS platforms are dominating.
FROM THE ARTICLE:
This is the fourth paradigm shift for Apple. Previous paradigm shifts brought us the personal computer, the graphical user interface, and the phone. All of which continue changing our lives today, even decades after they were introduced.
The first thing you need to know is the changes coming are WAY deeper than just a VR/AR headset, which would be important enough on its own. So, what is Apple getting ready to announce over the next year?
A new real-time 3D map of the entire world.
A new, rebuilt, Siri and a new search engine.
A new mesh network built off of your iPhone that distributes AI workloads to M1 chips in your home.
A new VR/AR headset, that I call “the TV killer,” or “the HoloDeck” with many devices being planned for the next decade from glasses to contact lenses. (Arrives in 2022, with glasses to follow sometime before 2025).
A new kind of programmatic surround sound (Spatial Audio is just the start).
New 3D experiences for inside cars.
Eventually a new car service itself.
A new OS for wearable, on-face, computers.
A new set of tools for developers to build all of this.
New 3D services for things like music, fitness, education, and more.
A new, portable, gaming device that will interact with this 3D world.
A new 3D audio service. Leaks from 9To5 Mac about that just today.
A new kind of noise-canceling, built on array microphones (the early version of this is just arriving in the new iMacs) and a new kind of video and audio sharing network, so that we will be able to have all sorts of new “walkie talking like” features.
🎥AMC Going On Offense!
AMC Entertainment Holdings Inc. gained Tuesday, extending last week’s rally, after raising $230.5 million with a stock sale to Mudrick Capital Management as the movie-theater operator pledged to “go on offense” with acquisitions.
The agreement with New York-based Mudrick is for 8.5 million shares of common stock at $27.12 apiece, 3.8% more than Friday’s closing price, AMC said Tuesday in a statement. The company, now an icon among retail traders, jumped as much as 23% to $32 at the open in New York trading. It traded at $29.98 at 9:35 a.m.
The latest equity sale with Mudrick “sounds expensive” with debt and equity indicating an enterprise value of over $16 billion, Michael Pachter of Wedbush said in an email to Bloomberg. If it returns to pre-Covid levels, AMC could optimistically reach around $1 billion in earnings after adjustments. The highest attained in the past is $929 million in 2018, he said. “Mudrick must know something I don’t.”
Here’s a thing Mudrick knows:
Mudrick’s stock purchase comes with the caveat that the shares be “freely-tradeable”, meaning the firm could sell the shares at any point or in any size it chooses. That would provide Mudrick with 8.5 million shares that could be sold as soon as today.
Below are the press release and the prospectus for Mudrick’s potential sales. (Don’t miss the GameStop-style risk factors, which include: “Within the last seven business days, the market price of our Class A common stock has fluctuated from an intra-day low of 12.05 on May 21, 2021, to $36.72 on May 28, 2021, and we have made no disclosure regarding a change to our underlying business during that period.”)
I have no idea what Mudrick is actually doing; all I am saying is that this is not a trade that ought to work under traditional theories, but it’s very much a trade that works now:
A meme stock closes on Friday at $26.12 per share, up 116% on the week on no particular news (but with lots of talk about short squeezes). https://www.bloomberg.com/.../amc-s-four-day-surge-slaps...
You buy stock from the company over the holiday weekend at a premium.
You announce it on Tuesday morning.
Everyone says “oh wow good news for that meme stock, guess the wild rally is going to continue.”
So it does.
You sell the stock into the enormous volume and rising prices on Tuesday morning.
🚙Ford vs. Rvian vs. TSLA
Whether you think electric is something that will replace ICE vehicles or not. This is the most important electric car to date.
The F150 is the most popular vehicle in North America. Due to range and charging constraints, I'm skeptical that id change over at this point but as a daily driver, I think this works.
I could see city-based construction companies buying these...
775 ft-lbs of instant torque
80% charge - 575 kms
100% charge - 735 kms
2 golf bags in front of the truck
charging takes forever
The future is finally here. Thanks, Elon.
🌊Best Links of The Week🔮
Facebook unbans the COVID leak theory - Last year Facebook banned people from posting links to the theory that COVID escaped from a Chinese government lab, but some version of this theory is now becoming a lot more mainstream (or at least not crackpot), given that Biden has asked for a report on it, and so Facebook has unbanned it. You could argue this undermines the whole principle of social platforms moderating 'fake' ideas, but on the other hand newspapers have always faced this problem. As Keynes said, 'when the facts change I change my mind - what do you do?"
Brentford FC beat Swansea this past Saturday in the “World’s Richest Game” — the Championship Play-Off Final — earning the Bees a promotion to the English Premier League and the roughly $300 million in guaranteed money that comes with it. Even more interesting? Less than a decade ago, with the club facing financial stress, a professional sports gambler invested about $700,000 into the club — eventually taking over as team owner in 2012.
The crypto industry is hamstrung by legal cost, confusion, and delay -Crypto projects frequently misunderstand the critical legal risks to their companies and have limited tools to mitigate those risks. Founders often find themselves facing high legal fees and regulatory scrutiny, impeding development of their project while accruing substantial cost. Given the low supply of, and high demand for, lawyers with crypto expertise, even projects willing to pay for robust legal advice have difficulty obtaining it.
Shopify: Evolution of a Leader - Lessons from Tobi Lutke's ongoing journey from Founder to CEO to Steward from Non-Gaap
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