Peloton Stock Sinks Late As Q4 Loss Far Worse Than Expected; Q1 Guidance Weak As Bike Price Cut

Peloton stock fell after the connected exercise-bicycle maker reported a much deeper-than-expected fiscal fourth-quarter loss, offered up a weak outlook for its first quarter and said it would cut the price of one of its bikes.


The company reported the results as it tries to address safety recalls, a reopening economy and strains in its supply, after the coronavirus pandemic caused an explosion in at-home workouts last year.

Peloton Earnings

Peloton lost $1.05 per share during the quarter, compared to FactSet estimates for a 44-cent per-share loss. Sales of $937 million topped estimates for $929 million.

Connected Fitness Subscriptions grew 114% to over 2.33 million. Paid digital subscriptions soared 176% to over 874,000. Total members now top 5.9 million.

Peloton also said it the price of its original Peloton Bike would come down to to $1,495, a move management said would make the product more accessible. But the company warned the decision will impact near-term profits. Increases in freight and commodity costs, it said, would also hit the bottom line.

The company said product recalls cost it $100 million. In May, Peloton announced the recall of the Tread and the Tread+, after reports of injuries. Earlier this week, Peloton said its new Peloton Tread would begin selling in the U.S., Canada and the UK on Aug. 30.

In May, Peloton estimated Q4 recall-related impacts would come in at $165 million.

Peloton Outlook, Recalls

Peloton sees Q1 revenue of $800 million, below analysts’ estimates for $1 billion. It expects to have 2.47 million connected fitness subscriptions, compared to expectations for 2.502 million.

Management also sees fiscal 2022 revenue of $5.4 billion, better than consensus for $5.25 billion. It forecast 3.63 million connected fitness subscriptions over that time, above estimates.

Peloton stock fell 6% late after closing down 1.9% at 114.09 in the stock market today. Shares of the company are off highs reached in January.

The Tread was sold in the U.S. as part of a limited invitation-only program from around November through March. It was recalled in May, on possible risk of injury. The Consumer Product Safety Commission warned the treadmill’s touch screen could detach and fall.

Peloton in May also recalled the Tread+, after a six-year-old child died after being pulled under the back of the treadmill, according to the CPSC.

The company also received 72 reports of “adult users, children, pets and/or objects being pulled under the rear” of the Tread+. Twenty-nine of those reports described “injuries to children such as second- and third-degree abrasions, broken bones and lacerations.”

Prior to the recall, the CPSC in April told consumers to stop using the Tread+ due to the safety concerns. Peloton initially called that announcement “inaccurate and misleading.” The company later called its initial response to the agency “a mistake.”

New Peloton Tread

On Tuesday, the company said a new Peloton Tread would begin selling in the U.S., Canada and the UK on Aug. 30. It will debut in Germany later in the fall. New Tread units will cost $2,495.

Peloton is offering to repair existing Tread treadmills in the U.S., UK and Canada to keep the touch screen attached. New units sold after Tuesday will come with the repair.

New Peloton Tread units will also come with a digital passcode to unlock the tread belt. They will also come with a safety key to allow users to make quick stops.

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Peloton Stock Chart Action

Peloton stock this month lost support at the 50-day and 200-day lines and remains below those key levels. The relative strength line, which compares its performance to the S&P 500, has trailed lower as well. Shares have a Composite Rating of 50 and EPS Rating of 55.

Along with Peloton stock, Lululemon (LULU) dipped 0.1% after hours. Nike (NKE) added 0.2%. Planet Fitness (PLNT) was unchanged after hours.

Sales of Peloton’s bikes, which are often used with online workout classes, have cooled off recently, as the economy reopens. The company has also faced shipping delays and higher costs due to backups at large U.S. ports.

Peloton in May announced plans to build its first U.S. factory, set to open in Ohio in 2023. The move, Peloton said, was intended to “make sure we have capacity, quality, and economies of scale in our bike and tread product lines.”

Peloton recently said it planned to launch an in-app video game, called Lanebreak, that puts users through different tempo and resistance tests. The company in June also introduced a corporate wellness program.


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