Peloton (NASDAQ:PTON) stock fell over 20% after it reported results and guidance that disappointed Wall Street.
The athletic equipment company lost $242 million, 68 cents per share, during the July quarter, on revenue of $642 million. Product revenue was down 32% from the April quarter. Peloton estimated first-quarter revenue will be $580-$600 million, with under 3 million subscribers.
The news sent shares down close to 30% in overnight trading. The stock was fighting to hold $5/share, a market capitalization of about $2.3 billion. Peloton is now down 37% in 2023.
Peloton stock was a Covid-19 pandemic star, the shares rising to a high of $150 in late 2020.
All the Bad News
CEO Barry McCarthy tried to paint the quarter, its fourth of the 2023 fiscal year, as a low ebb, with big plans for a better fiscal 2024.
He said fitness gear is a seasonal business that troughs in the summer, adding sales started picking up recently. The company launched a rebrand in May with a variety of prices for online services, ranging from free to $24 per month.
But the company couldn’t outrun a flood of bad news, starting with a recall of 2 million seat posts in May. The recall cost $40 million, more than expected. The company ended July with just $814 million in cash after losing $74 million of it during the quarter.
The new strategy is to go after corporate clients and other institutions, making its equipment an integral part of their wellness programs.
During the quarter, Peloton launched Peloton for Business, as Volvo (OTCMKTS:VLVLY) agreed to make Peloton apps part of its wellness program. There’s also a new campaign with colleges, starting with the University of Michigan putting its bikes into its fitness facilities.
PTON Stock: What Happens Next?
Bears will worry about bankruptcy. Bulls will note the company’s market cap is now lower than its 2023 revenue and hope the new strategy sparks a turnaround.
As of this writing, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
