New York, NY – Peloton’s stock took a major hit on Thursday, dropping about 20% in morning trading. Analysts had high expectations for the company’s fiscal second quarter, but Peloton fell short on several key metrics. The company reported a net loss of $194.9 million, or 54 cents per share, for the three-month period that ended December 31, compared to a loss of $335.4 million, or 98 cents per share, in the same period a year earlier. Additionally, Peloton’s sales dropped to $743.6 million, down from $792.7 million a year prior.
The company also issued a disappointing outlook for the current quarter, with sales expected to be between $700 million and $725 million, falling short of the Wall Street estimate of $754 million. Peloton’s finance chief, Liz Coddington, expressed uncertainty about the company’s ability to efficiently grow its Paid App subscribers and the performance of other new initiatives, as well as an uncertain macroeconomic outlook.
Despite the disappointing report, Peloton’s connected fitness subscription guidance came in higher than expected, and the company saw strong sales at retail partners such as Dick’s Sporting Goods and Amazon, with demand for its Tread+ exceeding expectations.
CEO Barry McCarthy acknowledged that the company has fallen short on reaching key targets, including returning to revenue growth and achieving sustained positive adjusted EBITDA. Despite these challenges, Peloton has shown signs of progress, including expanding its corporate wellness and commercial partnerships, selling its Ohio manufacturing facility, and restructuring its retail store footprint.
McCarthy remains optimistic about the company’s future, citing strong sales growth through retail partnerships, a successful Bike rental program, and strong demand for its Tread+ and Tread products. However, he also expressed uncertainty about future demand for the Treads and acknowledged shortcomings in Peloton’s customer service during the past holiday season.
Peloton’s struggles demonstrate the challenges of the rapidly evolving fitness industry and the company’s ongoing efforts to adapt and grow in a competitive market. As it continues to navigate these challenges, Peloton remains focused on driving growth and meeting the evolving needs of its customers.