Why Peloton's stock is spiking today

• 📈 Trending Up: Lux investing in LatAm … Recall AI … streaming prices, even loosely … women’s sports … USDC’s circulating volume … Indian tourism …

• 📉 Trending Down: My faith in humanity … Chinese oil imports … hurricane activity, for now … the Fed balance sheet … interest rates …

• 🤔 What Else?

  • How to fake $450M: News that one-click checkout startup Bolt was hunting up $450 million in new funding at a $14 billion valuation sent eyebrows skyrocketing around Silicon Valley. Bolt is infamous for its CEO getting sued by backers, exiting the CEO role, and allegedly not repaying a massive loan the company gave him.

    • The $450 million metric is not really a cash figure. TechCrunch and Newcomer interviewed Ashesh Shah of the London Fund, which is supposed to put $250 million into the company. Only, it turns out, a big chunk of it the purported sum will come in the form of marketing credits. Which is not cash.

    • Shah’s argument that the OpenAI-Microsoft deal “was compute on Azure” instead of cash has a little merit. Apart from the fact that the OpenAI agreement with Redmond was not traditional venture capital. Bolt’s backers want to pretend that their ‘deal’ is, which is a distinction and a difference.

  • Is AI bringing back small M&A? Dropbox is buying Reclaim.AI, a scheduling service that had raised $9.49 million while private. PitchBook data indicates that Reclaim was valued at just under $15 million in its penultimate venture round, implying an even higher pre-acquisition worth. No data yet on price paid, but we’ll get more in a later 10-Q, hopefully.

    • What I like here is that this is a small deal. VCs have been crying bloody murder over the present acquisition dearth, arguing that the FTC has cut a critical deal channel — mega-cap tech companies buying startups — off at the knees.

    • And yet there’s a good number of deals afoot, especially in AI: It was recently reported that Apple bought Datakalab, a French startup. Thomson Reuters just bought Safe Sign Technologies. Reddit bought Memorable AI earlier this month. Beehiiv bought Typedream earlier this summer. And in June Databricks spent a reported $2 billion on Tabular.

    • Perhaps some investors are annoyed that no one is buying their portfolio companies? Which I admit would be miserable in a zero-IPO climate. To wit:

  • The WeRide IPO is now on hold: The WeRide offering — CO analysis of the numbers here — is on hold as it works to complete some document work. CNBC notes that the company’s IPO approval window from the Chinese government will expire shortly. I am crushed. Bring back IPOs!

Via Florian Schmetz

Peloton’s partial recovery

Shares of Peloton are up 15% this morning in early trading, a major win for the formerly-lauded home exercise and streaming company.

You are familiar with the Peloton saga: An IPO in 2019, explosive share price gains from mid-2020 through early 2021, and, later, a slow decline as the company’s value from a peak of $167.42 to $3.87 per share, inclusive of its huge trading gains after reporting earnings this morning.

So what’s going on? Let’s find out. First, the big numbers: Peloton was expected to report $630.5 million in second quarter (Q4 fiscal 2024) revenue. Instead, it turned in $644 million. And an anticipated per-share loss of $0.17 per share was instead met with a $0.08 per-share loss in the same period.

A top-and-bottom beat is the report card companies want to turn in. Even better, Peloton’s calendar Q2 results included year-over-year revenue growth “ for the first time since Q2 FY22,” as the company put it.

But is the modest beat enough to have driven Peloton’s share sharply higher? To understand that, we’ll have to take a look at guidance. (Often, a company that reports earnings will trade more on its forward guidance than its trailing results.)

What does the street expect from Peloton in its fiscal 2025 (Q3 2024-Q2 2025 calendar)? Per a Yahoo Finance calculation, a $0.87 per-share loss in the year, and $2.7 billion worth of revenue. Here’s what Peloton told investors that it anticipates for its new fiscal year:

That’s a pretty steep revenue miss, yeah? So why isn’t the stock down?