Thursday, November 4th, 2021
Share crashes after hours
Peloton is getting out of step
In the corona pandemic, the fitness equipment company Peloton is one of the big winners. Many customers get on the company’s bike or treadmill within their own four walls. But now the boom is over. The forecast has been cut drastically, and investors are shocked.
At the fitness equipment specialist Peloton, the corona boom is finally over. The company cut its sales forecast for the current fiscal year drastically on Thursday. Peloton now expects revenues between $ 4.4 billion and $ 4.8 billion – three months ago the company was still assuming 5.4 billion. Investors reacted in shock and let the share crash after hours by around 28 percent.
Peloton was one of the great success stories in Corona year 2020. While gyms stayed closed, many bought the thousands of dollar networked exercise bikes. Even a recall campaign for the peloton treadmills seemed to have quickly digested the company.
But with the lifting of the corona restrictions, business is more difficult. Peloton also significantly lowered the forecast of the number of subscribers. At the end of the current financial year in mid-2022, the company now expects 3.35 to 3.45 million subscription customers – instead of the previous expectation of up to 3.63 million. Among other things, Peloton claimed that Apple’s new rules for more privacy on the iPhone made it more difficult to attract new subscribers to the app.
In the first quarter of fiscal year ended September, sales rose six percent year-on-year to $ 805.2 million. The bottom line is that Peloton made a loss of $ 376 million from a loss of $ 69.3 million a year earlier.
Among other things, higher logistics costs weigh on the result. Peloton also lowered the price of the original model of its training bike in August – and customers then increasingly preferred it to the more expensive and lucrative new device. Before the price cut, the two models would have sold about equally well. After Peloton cut $ 400 from the price of the older model, it now accounts for three-quarters of bike sales, according to a conference call with analysts.