David Einhorn thinks Peloton could be worth $31 a share

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…