Shares of Peloton were sent sharply plummeting on Thursday, as the exercise equipment maker reported its worst quarterly earnings in history, cut guidance projections, and slashed the price of its popular bike by 20%, as demand for its products appears to be disappearing.
With Peloton’s fiscal fourth quarter in the rearview mirror, the company’s results probably wouldn’t be so unpleasant, had it not been for the massive earnings-per-share and guidance miss. Surprisingly, revenue jumped 54% year-over-year to $937 million in the three-month period ending on June 30, even exceeding analysts’ estimates of $927 million. Its adjusted Ebitda loss hit $45.1 million, which is also better than estimates calling for a loss of $57 million.
However, the train carrying good news derails here, because Peloton’s loss per share plunged to an astonishing $1.05, against expectations of only $0.45. Looking ahead, the picture is much worse, particularly as the work-from-home culture that has surfaced during the pandemic appears to be receding. The fitness equipment company expects its first quarter to only hit revenues of $800 million, compared to projections calling for $1 billion, and an adjusted loss of $285 million.
Although Peloton’s full-year guidance was not as pitiful, the figures too, are not immune to further erosion in the coming months. The company expects revenue to reach $5.4 billion against estimates of $5.2 billion, and an adjusted Ebitda loss of $325 million. But wait, there’s more bad news: Peloton revealed it had flagged a “material weakness” in its financial reporting related to identification and valuation of inventory, but don’t worry, it will not result in an adjustment of historical results.
Of course, the bad news continues to pile on: Peloton conceded that its rip-your-face-off high prices for its exercise bike— which is just a de facto stationary bicycle with a huge iPad screen cemented to it— are likely a barrier to most consumers. So, for the second time this year, the company announced it will be slashing the cost of its bike by $400 to $1,495.
And, finally, we can now divert our attention below to a visualization of the market’s kneejerk reaction…
Information for this briefing was found via Peloton and Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
