Greenlight Capital’s David Einhorn thinks Peloton could trade as high as $31.50 a share if the company slashes costs, which could double its current adjusted EBITDA projections, CNBC has learned. 

That’s about five times the current price of its shares, which were trading around $6.20 midday on Friday.

In a pitch deck Einhorn presented at the Robin Hood Investors Conference on Wednesday, Einhorn pedaled on a Peloton bike as he explained the company’s many missteps over the years and the wide runway it has to turn its business around, according to a copy of the presentation obtained by CNBC.

If it can generate $450 million in EBITDA, about double its current projections, Peloton could trade between $7.50 and $31.50 a share, based on a benchmark study of comparable companies, said Einhorn. 

Notably, Greenlight’s analysis doesn’t assume “any growth in subscription revenues from new customers or price increases or other new initiatives, such as activation fees from the growing used bike market and international expansion,” Einhorn said. 

“Facing bankruptcy can force change,” he said during the pitch. “Peloton has started to right-size and cash burn has stopped. It refinanced its debt to push out maturities. And with a loyal customer base that pays $44 per month, it’s a valuable subscription business.”

Einhorn structured the presentation as if he was an instructor giving a workout class, occasionally shouting out investors in the room. The first page of the deck was titled “15 minute ‘Stock Pitch Ride'” and shows an image of Einhorn on a Peloton bike.

“Let’s start with some shoutouts,” Einhorn said at the beginning of the pitch, calling out a number of investors and sponsors, similar to the way a Peloton instructor would call out class attendees.

Each page of the deck shows a leaderboard of other apparent riders — including investor Bill Ackman and Robin Hood CEO Richard Buery — along with Einhorn’s speed, cadence and resistance, mimicking what users see while taking a Peloton bike class.

Greenlight and Peloton declined comment to CNBC.

Greenlight, which had a $6.8 million stake in the company as of June 30, conducted a benchmark study analyzing Peloton’s cost structure. The firm compared Peloton to three sets of peer companies: fitness businesses like Planet Fitness, consumer subscription companies like Chewy, and consumer online subscription businesses like Spotify and Netflix. 

The study found that even though Peloton has already cut costs to curb its cash burn, it’s seeing “basically zero adjusted EBITDA versus the peer median of $406 million,” Einhorn stated in the pitch. 

“For peers, over a third of gross profit flows through to EBITDA. Part of the problem is that Peloton spends too much on research and development,” said Einhorn. “Just as one example, Peloton spends about twice the R&D that Adidas spends … in dollar terms. And Adidas has 8 times more sales than Peloton and an order of magnitude more product lines.” 

Peloton’s stock-based compensation expense of $305 million in fiscal 2024 is also double the peer median and comparable to far larger companies like Spotify and Netflix – which are 30 times and 140 times larger, respectively, Einhorn said. 

At the heart of the thesis is Peloton’s high-margin subscription business, which generated $1.71 billion in revenue in fiscal 2024 with a gross margin of about 68%. If Peloton can make deep cost cuts, the company could generate far more free cash flow and EBITDA without needing to sell more bikes and treadmills, and without needing to grow its subscriber base. 

Earlier this year, Peloton announced plans to lay off 15% of its staff, close retail showrooms, and adjust its international sales plans, among other cost savings initiatives. It expects those cuts could reduce annual run rate expenses by more than $200 million by the end of fiscal 2025.

In August, Peloton said it expects it can post adjusted EBITDA of between $200 million and $250 million in fiscal 2025. But Einhorn said if the company gets its cost structure more in line with the benchmark, “there should be $400 – $500 million of EBITDA from the current subscription revenue base.” 

Companies that generate that range of EBITDA tend to trade at nine to 32 times that amount, implying a potential Peloton share price of between $7.50 on the low end and $31.50 on the high end, if it reaches $450 million in EBITDA, he said. 

To get there, Einhorn said the company needs new management. In August, Peloton’s interim co-CEO Karen Boone said she believes the new top executive will be in place by the time the company next reports earnings, which are now scheduled for Thursday. 

“The nice part of our thesis is that we don’t have to convince Peloton this is the right approach,” said Einhorn. “Peloton’s interim co-CEOs are telling the same story of a recurring, high-margin subscription revenue stream business. They have also implemented an initial cost-cutting plan, which still leaves plenty of room for the new CEO.” 

He said the company continues to garner top reviews among consumers and fitness publications and has a rabidly loyal customer base. He added that even though fitness buffs are returning to the gym, home workouts are here to stay.

“Working out in the comfort of your own home is not a fad,” said Einhorn. “And a trend towards healthier lifestyles should all drive underlying subscriber growth over time.”

Walmart shut its doctor offices for people. But the nation’s largest retailer is expanding its pet care business.

On Tuesday, the company announced it will open five more pet services centers in October and early November. The new locations in Arizona and Georgia will include veterinary care and grooming. Walmart opened its first pet services center last year in the Atlanta area.

Walmart’s pet category is an attractive growth opportunity because it drives frequent purchases, resonates with customers across age groups and tends to hold up even when customers’ budgets are stretched, said Kaitlyn Shadiow, vice president of merchandising for pets for Walmart U.S.

Walmart’s pet services centers will have their own dedicated entrance next to a store. They will be under the Walmart name, but staffed by employees of vet care and pet product company PetIQ. The centers will offer routine vet care, such as wellness exams, vaccines and minor medical services, and grooming for cats and dogs.

Shadiow said Walmart decided to expand after seeing strong visits and repeat rates at its first pet services location. About 25% of customers had never shopped at Walmart for pet items before, she said. And when shoppers went to the store for vet or grooming services, Shadiow said it created a “halo effect” that lifted sales for pet food and other supplies, too.

“If you think about pet services, the business case is there,” she said. “We are already serving the needs of so many pet parents today, and it’s a great opportunity for us to help do that in one convenient location or trip.”

Other factors could be motivating Walmart. Chewy and Petco have expanded into pet services as well, with specialty retailer Petco using its stores to become a major vet provider. The services are higher margin than pet food, but are needed more often than other supplies like leashes, pet beds and crates.

Pet ownership spiked during the Covid pandemic, which led to more household spending on dogs, cats and other animals, and a bigger need for vets. Annual household spending on pets is expected to reach $1,445 per animal by 2026 and $1,733 by 2030, according to a recent survey by Morgan Stanley Research. That would represent a 113% jump in total industry spending from $122 billion in 2019 to $261 billion by 2030, the firm found.

Walmart has seen other signs of high demand. A subscription to veterinary telehealth provider Pawp was used more than any other limited-time offer for Walmart+, the retailer’s membership program and answer to Amazon Prime, according to Venessa Yates, senior vice president and general manager of Walmart+. Starting next week, it will turn that limited-time offer into a permanent benefit.

The pet category has also been a way to reach younger and more affluent shoppers, Shadiow said. Gen Z is the fastest-growing segment for Walmart’s pet category, as the group ages into pet ownership, she said. The number of customers shopping the pet category with a household income of over $100,000 grew by 36% year over year, as of the end of July, she said.

Walmart announced earlier this year that it would close all of its 51 health-care clinics for people — a sharp turnabout for the company, which it pinned on “the challenging reimbursement environment and escalating operating costs.” The clinics offered lower-priced doctor visits, dentist appointments and therapy sessions.

Walmart also closed its human telehealth provider, which it had acquired for an undisclosed amount in 2021. It has tested the pet services concept in Dallas, Georgia, where it opened its first health clinic for people in 2019.

Yet Shadiow said pet care is a simpler and more profitable business. Fewer people pay for pet care through insurance and the centers themselves can be smaller, she said. People want transparent pricing since they often pay out of pocket. Plus, she said, Walmart is a one-stop shop for customers who need related products, such as pet prescriptions or food.

“We feel a lot more confident in the ability for this to be successful over the long term,” she said.

— CNBC’s Gabrielle Fonrouge contributed to this report.