Peloton Needs to Take a Page Out of Jeff Bezos’ Book

Everyone dreams of being Jeff Bezos. If you haven’t, what are you striving for? We all may be satisfied with our personal lives, careers and family, but hey can you imagine being worth over $100 billion?

Peloton may not have the impact that Amazon has had on the world. However, they’ve re-shaped the way we think of personal fitness. Due to stay at home orders, those who sought fitness classes, invested in Peloton’s products rapidly. So rapid that shipments have been delayed for months and people are still buying. After celebrating a quarter where the company earned $1 billion it’s time to focus on capital allocation.

What made Jeff Bezos so powerful is his incredible ability to take profits and put that money towards making the business better. Peloton has the opportunity to do this to keep up with its rocket-speed growth. Eventually as the world opens up, Peloton won’t be able to get away with telling its customer that its acceptable to wait over two months for bike. By taking its massive profits and investing towards supply chain to speed up shipping will help Peloton grow as it eventually expands to more products.

There were many knocks about Peloton when it entered the market. Is it overvalued because the COVID-19 pandemic? Probably. However, they can use this short-term success to be dominant in the long-term if they can successfully conduct strong capital allocation practices to boost supply chain and even the products itself. Luck plays a factor in business and life. How you take advantage of that luck moving forward is what makes life more than just luck.

Not a doctor, nor do I play one on Twitter. Value investing appreciator. Trying to make sense of wild & crazy stock market.