Motley Fool Hidden Gems Investing - Can AI Drive Peloton’s Comeback?

Episode Date: November 12, 2025

We discuss Pfizer’s $10 billion deal to buy Metsera and finally get into weight loss. Plus, Peloton is making a compeback and Circle is growing on the back of stablecoins, but Coinbase may be the real winner here. Travis Hoium, Rachel Warren, and Jon Quast discuss: - Pfizer buying Metsera - Peloton’s comeback - Circle’s growth and why Coinbase is a winner Companies discussed: Pfizer (PFE), Peloton (PTON), Circle (CRCL), Coinbase (COIN). Host: Travis Hoium Guests: Rachel Warren, Jon Quast Engineer: Dan Boyd Disclosure: Advertisements are sponsored content and provided for informational purposes only. The Motley Fool and its affiliates (collectively, “TMF”) do not endorse, recommend, or verify the accuracy or completeness of the statements made within advertisements. TMF is not involved in the offer, sale, or solicitation of any securities advertised herein and makes no representations regarding the suitability, or risks associated with any investment opportunity presented. Investors should conduct their own due diligence and consult with legal, tax, and financial advisors before making any investment decisions. TMF assumes no responsibility for any losses or damages arising from this advertisement. We’re committed to transparency: All personal opinions in advertisements from Fools are their own. The product advertised in this episode was loaned to TMF and was returned after a test period or the product advertised in this episode was purchased by TMF. Advertiser has paid for the sponsorship of this episode. Learn more about your ad choices. Visit ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

Is Peloton making a comeback? Motley Fool Money starts now. Welcome to Motley Fool Money. I'm Travis Hoyum, joined today by Rachel Warren and John Quast. I do want to get to Peloton because they have a really fascinating story over the last few years. But we're going to start with one of the big deals of the week. That is Pfizer winning a bid against Novo Nordisk for Metzera. Rachel, I got through all of that word salad, so I'm proud of myself there. This is an obesity treatment startup, so they don't actually

have a product out there. But there was a bidding war for these companies. So what do we need to know about Pfizer? Actually, it seems like kind of getting into the weight loss game that they have not had a lot of success, like companies like Eli Lilly and Novo Nordisk. Yeah, this is an area that Pfizer has wanted to expand into for a while now. You might remember at one point, they actually had their own GLP-1 candidate. They had to discontinue that back in April of this year. So, there had been a bidding war that essentially erupted between Pfizer and Novo Nordisk for Metzera. And that started back after Pfizer's initial offer in September. So, Pfizer ultimately won the bid. They had a sweetened offer of up to $10 billion.

And this acquisition could really position Pfizer in the long run in the highly competitive and obviously growing obesity treatment market where they've previously struggled with their own development. So, Mitzara has a pipeline of drug candidates for metabolic diseases that target different gut hormones that offer some really key advantages in efficacy and tolerance. And really a key feature of the drugs that Mitzera is developing is the potential for once-monthly dosing. That would be a significant improvement over the weekly injections of current treatments. So their lead candidates, one's a monthly injectable GLP-1 receptor. They're also working on an oral version. They've also got a monthly amylin analog candidate. And Pfizer plans

to use their own manufacturing and commercial infrastructure to help accelerate Mitzera's drugs, which is a really key advantage. So good things happening from this deal. So for those of us who are not quite as familiar with the pharmaceutical space, is this sort of another entrant into the GLP-1? Because we've been hearing about GLP-1s for years. The prices are starting to come down. We've heard about there's some oral treatments that are coming to market, I believe, next year. There's a bunch of stuff that's in clinical trial right now. Is this sort of another expansion of the market, or is this going to be a game changer? Because it seems like these are, are these like kind of incremental

improvements that are being made? Yes. You know, a monthly injection is better than a weekly injection, but if it's $500 and the weekly is $200, that will maybe make the difference. Is that sort of the way I think to think about it? It's at least getting Pfizer into the game, but it does increase competition. Yeah. I think that's a fair way to put it, especially because these candidates, while certainly notable to add into Pfizer's wheelhouse are not nearly as advanced as many of the other ones we're talking about from Eli Lilly and Nova Nordisk, who are working, of course, on their own oral formulations. Eli Lilly notably has their next generation GLP-1 that they're going to be seeking regulatory approval for in the coming

months. Right now, those are the two key leaders, Nova Nordisk and Eli Lilly. You have a lot of other companies working on their own versions. I think as the years progress, it's going to become a more competitive space. You're not just going to have these two dominant players. I think that's where Pfizer sees an opportunity to join that space, so to speak, and maybe differentiate with their own products in the future. John, we've been hearing about GLP-1s for a very long time. This is another big check that's being written for a GLP-1 maker, or at least a potential maker in the future. Is this just kind of another fad that's going to eventually come and go? I think everything is a fad, Travis. It's amazing how much human beings are prone to herd mentality

with things i think there's some of that here for sure and what is interesting about this trend if you will let's call it a trend not a fad but the weight loss drug trend i don't remember at the beginning of this hearing so much concern about what are the side effects and it seemed like it was all upside for your health now i'm starting to hear a lot more murmuring about the side effects for some of these drugs. I do wonder if that leads to cooling demand right when you have ramping supply. And so if that is true, if demand starts to cool off while all these companies are in bidding wars to get their product out on the market, I would say that you have lower prices eventually. That's just economics 101. Speaking of economics 101, Rachel, one of

the things I wanted to get your thoughts on was some of these telehealth companies in particular have been big names in GLP-1s. Hims and Hers is one that comes to mind. I have a position in that one. But that's been kind of the demand source for a lot of these GLP-1s. But they haven't necessarily played real nicely with the pharma companies. Pharma companies are used to dealing with insurance companies and kind of a different infrastructure than going direct to consumer

like the Hims and Hers, the Rose of the world. So is this going to be good or bad for them? because it seems like increasing supply should be good for those demand sources and could potentially bring those prices down even more, something that we've seen as a trend over the past six months or so. Yeah, it's an interesting dynamic. I do think the opportunity for a lot of these telehealth companies like the HIMS and HERS of the world is probably in the long run going to be in these branded partnerships with key players like Nova Nordisk and Eli Lilly. Because, for example, there was a time when HIMS and HERS, they were manufacturing compounded versions of

these GLP-1s, which they were legally allowed to do when there was a shortage, the shortage is over. So now there's sort of this legal gray area in which they operate, where they're able to offer individualized doses. But there's some concern about the safety there that's not specifically vetted by the FDA versus getting it straight from the source, like Eli Lilly and Novo Nordisk. And those companies, I will note, also have their own direct-to-consumer platforms, where they are offering, in many cases, cheaper- Which does, if you look at those sites, it does remind me a little bit of Sears having a website in 1998. It's not the Amazon. No, no, no. It's not necessarily the most high-tech space. But it is very much, I think,

a dynamic where these companies are recognizing that they need to have these direct-to-consumer options in order to get their product to more and more customers. And they're adapting to that price sensitivity, right? You've got Eli Lilly, for example, that's offering ZipBound vials for anywhere from $349 to $499 a month. That's much cheaper than the average cost of about $1,000 per month without insurance that a lot of consumers contend with. So, I think we'll see more of that. You know, there's been deals that companies like Eli Lilly and Novo have made with Medicare that could open up a vast new market. But you got to remember, the price of manufacturing these GLP-1 drugs is still relatively low compared to the cost at which those companies are going to sell them,

even if they lower some of these prices. So the margins are still expansive and there's a lot of potential for these drugs beyond diabetes and obesity. That's another key area where you could be seeing a lot of new markets unlocked in the next decade or so. We will see if they can make up for that margin with more volume in the future. When we come back, we're going to talk about Peloton's potential comeback. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Peloton was one of the stocks that had a pretty good week over the past week. This was a market darling during the pandemic, but shares have been absolutely crushed since then. Really, the viability of Peloton has come into question over the past couple of years. They still have

debt on the balance sheet. But, John, is this a company that can now make a real comeback? They're now profitable. I don't think I would have thought this a couple of years ago for Peloton. Yeah, Travis. If you look at probably the most underlying important business trends, Peloton isn't really in a terrible place. In fact, if we zoom out and take a big picture view, Peloton's growth has been perfectly acceptable over the long term. If we go back in time five years, same quarter five years ago, they had 1.3 million connected fitness subscriptions, and now five years later, they have 2.7 million.

It's more than doubled over five years. That's a good growth rate over five years. Now it's been bumpy. It's been lumpy, but it has been perfectly acceptable when you take that long-term view. But I will say that when it was scaling a few years ago, the old management team put this company in a hole that new management has been trying to dig itself out of. That has not been an easy process and it hasn't been a quick process, but it is starting to get it done. i think in that hole to just to be clear i think had to do with not only the cost structure from the hardware side that was a real challenge a couple years ago they were basically subsidizing

that hardware they're no longer doing that they do have positive gross margins and hardware but also just their operating costs were completely out of whack with their revenue that was coming in the door and so that's what seems to have fundamentally changed is that their company is kind of doing more with less that's where you get a little bit of operating leverage even though you still do have a decline in revenue. It sounds bad to have a decline in revenue, but if you have a decline in revenue and your profits are going up, at least investors aren't going to be going to zero. It's such a good point. They reported a drop in revenue, but an increase in gross profit. That is an incredible thing when you look at the, they're bringing down

the cost of revenue. And that's a good thing structurally also on operations, bringing down those expenses. And particularly when it comes to general and administrative. So your corporate expenses. Those have come down significantly. We're spending far too much on that. Debt has been coming down, took on a lot of debt to maybe acquire some other businesses, questionable strategies, inventories coming back down. That was a problem, overinflated inventory. And so all these things, it has made it difficult to dig itself out of, but it's doing it. And now you look at the cashflow, it's been free cashflow positive for over a year now. And it expects $250 million in free cash flow this year versus a $3.1 billion market cap.

So trading at about 12 times this year's free cash flow, that's not terrible, assuming it can continue to grow. Yeah, that's the big question. Rachel, one of the interesting things over the past, even just a few months, is some of the new product launches that they have seem to really be changing the strategy. They introduced a new line of hardware, slight improvement to the hardware itself. but what was interesting is they brought in what they call Peloton IQ. So it will judge your form if you're doing weight training workouts, for example. Kind of bringing, I would say,

artificial intelligence into working out. But I'm a Peloton user. It's not really in-your-face AI. So I think this is an interesting play for them. Hasn't led to more subscribers yet. But hopefully, if you're adding more and more value to people, that's ultimately where you get. And it seems like they're moving into markets like hospitals and commercial applications too. Yeah, I think they're really trying to see where the business can go from here. I mean, obviously we know under Peter Stern, the strategy has really been shifting towards trying to seek profitability, subscription services, AI powered software. We know that's been the vision. And last month, you know, they launched this completely new lineup. It's called the Cross

Training Series. It's powered by their Peloton IQ, which is this AI system. It offers, you know, personalized guidance, rep counting, form correction via a movement tracking camera. So that's actually kind of cool and interesting. And I think they're sort of experimenting to see where that resonates with their customers. And they've also been trying to expand more into holistic wellness, right? Through different partnerships, they acquired the Breathwork app. They're trying to broaden their appeal beyond traditional cardio. And I still have, I think, a healthy measure of skepticism about where they're able to grow from here. I mean, Obviously, this isn't pandemic days. We saw where that model failed. I think they're trying to find

a new and more resilient model. Will they be able to? It's possible, but I still think they have an uphill battle. I will say the new AI training and workout planning tools are cool. I took a look at them. Is it enough to bring the business back? It remains to be seen, but I like what they're trying. I like that they're leaning into this new area of the space. It's certainly something to watch. Yeah. Cutting costs only gets you so far. Eventually, you have to turn around that revenue. So, John, is this a turnaround business or turnaround stock that's worth betting on for investors? That's a difficult question, Travis. I think that ultimately, like I said, if the business can grow from here, then yes, this is a decent opportunity. And I

would say that there are some signs that we've already bottomed out. So, the revenue was dropping and now it's projecting for flat year-over-year growth. So, that trend seems to be improving. My question is, how big can this business be? Like I said, 2.7 million Connected Fitness subscribers. Is it possible to double from here long-term? What is the upside? I'm not completely convinced about that. Personally, I'm not sure if I would be investing here. Also, I think that personally, I would like to see some further improvement. The trend is real, but I'd say that debt still needs to come down some. I would say that the revenue growth rate needs to pick up a little bit more before I'll believe in this story.

They are still bleeding subscribers. I happen to be one of them, but yes, my Peloton bike is something that I use as more of a clothes hanger these days than I used to. So I will put myself in that category and be honest. When we come back, we're going to talk about circles, phenomenal results, and a potential hidden winner there. You're listening to Motley fool money. Welcome back to Motley fool money circle reporter earnings before the market opened today, Wednesday. Revenue was up 66% to $740 million, as USDC circulation increased 108% to $73.7 billion. Net income more than tripled to $214 million. John, these sound like phenomenal results, but can we take a step back here and just give us a 101 on what in the world is USDC

in stablecoins when it comes to Circle? Yeah, that's really good, Travis. Maybe I can just start by oversimplifying how stablecoins work. Essentially, you put a physical dollar into the system. They mint a stablecoin that represents that dollar. They take your dollar, they put it in the bank somewhere, and then they give you the stablecoin, and now you can use it. You can use the internet money. In the meantime, they can generate income from the dollar that you gave them. Whether that's in treasury bills or something else, they can earn money from the money that you put in. Now, when you want to return your stable coin and get your dollar back, you can. They will then burn that stable coin, take it out of circulation, and give you the

dollar back. That's how it all works in theory. Now, when it comes to USDC, the second largest stable coin, U.S. dollar stable coin that there is behind Tether, and it was co-created with Circle and Coinbase. They were co-creators in this project. And USDC was losing ground significantly at one point, and that's when Circle and Coinbase struck up this new deal to share revenue in a different way. And essentially, Coinbase gets all of the USDC interest income now from the stablecoins that are on its platform. And what that did was it pushed Coinbase to push USDC more than it ever has. And it's actually working. So you look at the circulation of USDC, it's doubled over the past year. And that's gained ground on Tether because

Tether's only increased by around 50% over the past year. So gaining ground, it's been a good strategy. Yeah. And when you look at the results, these numbers are so interesting because what is hidden in the numbers is that Coinbase is actually making more revenue from the USDC token than Circle is, even though the fact that Circle runs the USDC token. Just to put these numbers into context, in the most recent quarter, so the third quarter of 2025, Coinbase generated $355 million in revenue from stablecoins. Almost all of that is from the USDC token. If you look at Circle's numbers, their revenue less distribution costs, which would include those costs that go to Coinbase, $292 million worth of revenue. So Coinbase is actually a bigger beneficiary

because they're generating more of this revenue. They get 100% of the money on their platform. That brings us to the next really interesting thing, Rachel. That is the ARK ecosystem, which they recently launched. This is only a couple of weeks old, less than a month old, but it's called the ARK Public Testnet. This is actually a layer one blockchain. So they're kind of trying to create their own ecosystem. So maybe they can get a little bit more of that revenue. They're still going to have to share that with some of their partners. But this is, they're calling this the economic operating system for the internet. Is this the kind of thing that could be disruptive? Because this is what we've been talking about from cryptocurrencies and blockchains for a

long time. But this seems like we're closer to being there, if you will, than we ever have been. Yeah, this is an interesting one to watch. I mean, so far, the testnet has over 100 participants, but that includes major financial players, right? Like Deutsche Bank, Goldman Sachs, MasterCard, Visa. So all these sort of traditional companies you think of are onboarding into this space. And I think that that engagement suggests that there's a strong interest in using the platform for institutional rails, capital market settlement, real-world asset tokenization, that could route significant value away from traditional systems. Do I think that happens overnight? No. But I do think we could be looking at some big changes over the next

decade or so. And this ARK network, it's designed to eliminate a lot of the friction and accounting complexity that's associated with volatile cryptocurrencies for transaction fees. and it's a design choice that's more specifically tailored to business needs. It's designed to support compliance. There's a lot of really important features there that align with a lot of the emerging stable coin regulations we've seen. And I think that focus is on a much more controlled environment for big capital. That makes it a much more viable on-ramp for institutions that are concerned and rightly so are concerned with their regulatory obligations. So it'd be really interesting to see how this develops in the coming months and years. But it's certainly,

I think, a key pinpoint to watch with this business. John, one of the things that we've been talking about for years, and you and I used to be on the crypto show for The Motley Fool, and we would talk about disruptions in payments all the time. And at that time, it was a little bit hypothetical. You had Solana and Ethereum, and paying with these volatile cryptocurrencies seemed like a little bit of a long shot. We're now moving to the point where this entire blockchain is built on basically the US dollar, seeing more and more assets like the base blockchain. You can basically do whatever you want with effectively US dollars just in a digital world. Is this the disruption of traditional payments? And I'm thinking companies

like Visa and MasterCard, Discover, American Express that are charging 3% or so every time you go to a restaurant, every time you go to a grocery store, they get 3% and the banks behind them get 3%. Is this the potential disruption that we've been talking about for years? I wouldn't say that Circles ARK blockchain is the disruption we've been talking about, but I do think it is one player who's trying very hard to advance this trend forward. But a lot of players are doing the exact same thing. So I wouldn't necessarily say that Circles is game changing, but it is part of what we've been talking about. BlackRock CEO Larry Fink has been talking about it a lot over the past year, talking about how all financial assets will be

tokenized at some point. He believes that is an inevitable statement for somebody like him to make. It's astronomically huge. And I don't know if either of you had siblings growing up, but the thing with siblings is it didn't matter what you were doing. You just wanted to do it faster and better, right? You want it to be first. It didn't matter what it was. And I really see a lot of that happening here in the financial world. As we move towards this tokenization of every financial asset. Everyone's in this race forward and Circles, one of the runners in the race, it's sprinting ahead with its ARK blockchain, but you have Coinbase as well with what it's doing with base. You have Robinhood saying, we're going to tokenize everything. We are sprinting

towards that destination. And so, yes, it is a continuance of the trend we've been talking about. We don't really know what the winners are going to be. And maybe the right answer for investors is just a basket of companies that are thinking about this as a point of disruption. So we'll see how this plays out. Definitely something to follow in the future. As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against. So don't buy or sell stocks based solely on what you hear.

All personal finance content follows The Motley Fool's editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. For John Quast, Rachel Warren, production leader Dan Boyd, and the entire Motley Fool team, I'm Travis Hoyum, sending love to those who couldn't be here today. Thanks for listening to Motley Fool Money. We'll see you here tomorrow.