Peloton’s Q4 Earnings Could Contain A Surprise Boost For Bulls

Ahead of its Q4 earnings later today, Peloton investors should be aware of a potential ringer for the company.

Feb. 4, 2021

Yes, you’ve likely heard all of my Peloton (NASDAQ: PTON) jokes before, but behind the comedic facade, I am just an investor who is jealous that he can’t actually order a Peloton bike in this part of the world.


Anyway, Peloton could be making a lot of businesses jealous after it reports Q4 earnings later this evening, with 2020 bringing massive growth for the company — as well as sending its stock up 440%. But does the little-bike-that-brings-you-nowhere have another ace up its sleeve?

What is this intriguing secret?

Well, it’s no secret, but you may not have heard that Peloton teamed up with Chase Bank back in October to offer discount Peloton Digital memberships to Chase Sapphire credit card users.

This is important as it allows Peloton to bring in new subscribers at much lower customer acquisition costs, even if it is footing the discount bill. The savings come from an area of great contention among modern businesses: App store fees. 

Peloton’s Digital app must pay a 30% fee for a subscriber’s first 12 consecutive months and a 15% fee for subsequent months to Apple and Google, costing the company millions. However, Sapphire subscribers availing of their offer must pay through Peloton’s official site, thus bypassing app store fees.

For every customer that signs up directly via its online store, Peloton’s gross profit increases by $3.90 for 12 months and $1.95 per year thereafter. If 500,000 new subscribers signed up via its store, it would increase gross profit by almost $2 million per year.

Though the deal is young, it opens the door for more such partnerships, thus quickening Peloton’s ability to eventually generate a profit. It will definitely be worth keeping an eye on Peloton’s gross profit this evening.

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