Peloton Stock Is Bleeding Red, Know Why!

Peloton Interactive Inc.

Peloton Interactive, Inc. $PTON: $55.64(-35.35%) shares plummeted more than 34%, on Friday, opening at a 17-month low of $57.13 apiece, after the exercise equipment company posted lower-than-expected revenue figures in its fiscal first-quarter earnings report combined with a grim forecast.

In the first quarter ended Sept 30, 2021, Peloton posted a loss per share of $1.25, compared with $1.07 expected by analysts polled by Refinitiv.

In the reporting quarter, Peloton published a net loss of $376 million corresponding to the prior-year period’s net income of $69.3 million.

Revenue saw a growth of 6% to $805.2 million from $757.9 million YOY, missing expectations of $810.7 million.

Connected Fitness segment revenue, which includes the contribution from Precor, stood at $501.0 million, a 17% year-over-year decline and representing 62% of total revenue. This was primarily due to a decline in bike portfolio deliveries compared to the previous year’s same quarter.

Subscription revenue jumped to $304.1 million, a 94% year-over-year growth, and 38% of total revenue. Connected Fitness subscribers grew to 2.49 million in the quarter ended, representing year-over-year growth of 87%.

Connected fitness subscribers are those customers who own a Peloton product and pay every month to avail the services of the company’s digital workout content.

Connected fitness subscribers completed 16.6 workouts per month, on average, lower than the 20.7 workouts reported in a year-earlier period.

Average Net Monthly Connected Fitness Churn was 0.82% in the quarter ended, 12-month retention rate summed at 92%.

The impact of the declaration could be observed on the dashboard of Quantale as Peloton’s social engagement among the users of Twitter. Reddit increased nearly 3500 percent on Thursday, as well as trading volume rose roughly 250%.

21.31 million shares of the stock exchanged hands, 14.01 million below the average of 7.30 million.

During the after-trading hours on Thursday, stock market investment sunk as much as 30%, marking the after-hours low of $60.

Peloton Stock Bleeding Red, Here’s Why!

The exercise equipment and media company’s stock today opened at $57.13 apiece, down $28.93 from the previous day’s close of $86.06. Around 1340 hours, the stock was bleeding red, trading at $56.44, down 34.46%.

Peloton trimmed its annual revenue forecast by almost $1 billion and slashed its projections for subscribers and sales, highlighting its obstacles to adapting to the post-pandemic economy.

The maker of exercise bikes sees its annual connected fitness subscribers total between 3.35 million to 3.45 million, while its prior outlook was 3.63 million. Also, it expects to generate revenue between $4.4 billion to $4.8 billion, lower than analysts’ expectations of $5.39 billion.

For the second quarter, the company anticipates its connected fitness subscriber count to range between 2.8 million and 2.85 million.

Sales are expected to come in between $1.1 billion and $1.2 billion, lagging behind analysts’ forecast of $1.5 billion.

“The primary drivers of our reduced forecast are a more pronounced tapering of demand related to the ongoing opening of the economy, and a richer than anticipated mix of sales to our original Bike,” the company said.

Peloton said that along with the revised forecast, it will be taking concrete steps on its expense base and adjusting operating costs to orient investments in the direction of new growth expectations.

The company forecasts that adjusted EBITDA shall stay profitable for the full year FY 2023.

Pandemic helped Peloton record its first and only profitable quarter as Americans brought their gyms to homes. But with people going back to the office, school and gyms, demand for the company’s equipment has weakened.

Supply-chain constraints combined with rising costs of commodities and freight mulling over Peloton’s bottom line.

“We anticipated fiscal 2022 would be a very challenging year to forecast, given unusual year-ago comparisons, demand uncertainty amidst re-opening economies, and widely-reported supply chain constraints and commodity cost pressures,” Chief Executive Officer John Foley said in a letter to shareholders.

A slower-than-expected start to the second quarter and “challenged visibility” in the near term led the company to lower its expectations, Foley said.