Peloton Shares Tumble After Huge Losses, Disappointing Forecast
Peloton has posted a large June quarter loss, as treadmill recalls and slowed growth see the company take a hit it says it won’t recover from until the 2023 financial year.
Shares dropped 15 per cent after the dismal showing, sitting at 6 per cent lower in extended trading.
Peloton posted a net loss of $USD313.2 million, or $1.05 per share, compared with the $89.1 million profit it posted the previous year.
Total revenue grew 54 per cent to $936.9 million from $607.1 million a year earlier, but growth slowed dramatically from the March quarter, which saw sales top $1 billion, doubling from the same quarter in 2020.
Peloton’s sales forecast for the current quarter has dropped to $800 million, well below Wall Street estimates of $1.01 billion.
Analysts made these predictions before Peloton slashed the price of its Bike, in order to attract customers.
“The past year represented an inflection point for the connected fitness industry, with significant increases in awareness and demand following the onset of the COVID-19 pandemic,” CEO John Foley wrote in the shareholder letter.
“As we have discussed in the past, this necessitated significant investments in manufacturing capacity, logistics and expedited shipping to reduce order-to-delivery windows, which we were pleased to restore to pre-pandemic levels during the fourth quarter.”
The company’s letter to investors spells out a litany of woes.
“In the near term, our profitability will be impacted by the price decrease in our original Bike, significant increases in commodity costs and freight rate increases, a sales mix shift to Tread, investments in marketing to broaden our appeal, accelerated investments in new products and features, investments to scale our Member support and logistics operations, and significant
investments in systems to support our growth.
“Looking ahead, we expect to return to Adjusted EBITDA profitability for FY 2023.”
In addition, the company disclosed that an audit of fiscal 2021, discovered “a material weakness” in how the company has been doing its accounting. It won’t adjust any of its past results, which will no doubt lead to confusion, as investors wonder if share prices were inflated due to these accounting errors.