Based on your understanding of Peloton, and the purpose of the valuation that Lauren Truxton has been asked to perform, which of the valuation approaches do you think would be the most appropriate? Which do you think would be the least appropriate?

First, read the case Peloton Interactive, Inc.: Valuation During a Global Pandemic

Second, answer the questions below. In your initial response to the topic you have to answer all questions:

1. Based on your understanding of Peloton, and the purpose of the valuation that Lauren Truxton has been asked to perform, which of the valuation approaches do you think would be the most appropriate? Which do you think would be the least appropriate?
2. What information would you need in order to estimate the weighted average cost of capital for Peloton? Since Peloton has only been publicly traded for one year, how would you estimate the beta for the stock using the CAPM?
3. Many of the companies that are in the digital services space have not generated any profits, yet have had remarkably high returns for their shareholders. How do you think investors in these companies evaluate these firms in the absence of profits?
4. Two possible comparable firms were suggested for Peloton: Nautilus (NYSE: NLS) and Netflix (NASDAQ: NFLX). How would you choose which firm is the best peer comparable?
5. If you were in Lauren Truxton’s position, would you hold on to Peloton’s stock or sell? Why?
6. Reflection the students also should include a paragraph in the initial response in their own words, using finance terminology, reflecting on specifically what they learned from the assignment and how they think they could apply what they learned in the workplace or in everyday life.

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