Peloton tanks 30% on disappointing guidance: ‘it’s pretty ugly’

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Nov 4, 2021
  • Peloton misses estimates in Q1 and gives dovish guidance for the future.
  • Wedbush's James Hardiman discusses earnings on CNBC's "Closing Bell".
  • Shares of the American company tanked nearly 30% in after-hours trading.

Shares of Peloton Interactive Inc (NASDAQ: PTON) tanked nearly 30% in extended trading on Thursday after its Q1 results disappointed and management gave dovish guidance for the future, citing supply chain issues.

Wedbush analyst comments on Peloton’s report

On CNBC’s “Closing Report”, Wedbush Securities’ James Hardiman said expectations were already low for Q1, but it was the guidance that disappointed the investors more.

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It’s pretty ugly; the guide. The stock got hammered after Q4 because they got it to an abysmal first quarter. But the implied guidance for the remainder of the year was inspirational. But those numbers didn’t withstand. As we’re seeing now, they brought those targets down substantially.

According to Hardiman, the earnings report proves that the launch of a new treadmill and lowered price for its core exercise bike failed to deliver what the company had expected.

Q1 financial performance

Peloton said it lost $376 million in the fiscal first quarter that translates to $1.25 per share – a massive decline from 20 cents a share it “earned” in the same quarter last year. The exercise equipment and media company generated $805.3 million in revenue versus the year-ago figure of $758 million.

In comparison, the FactSet consensus was for a narrower $1.10 of per-share loss on a higher $809 million in revenue. Peloton was faced with tough comps this quarter as it benefitted greatly from the pandemic driven craze for home fitness in Q1 of 2020.   

Future guidance

For the full financial year, Peloton slashed its revenue guidance from $5.4 billion to $4.4 to $4.8 billion, including up to $1.2 billion it expects in the holiday quarter versus the FactSet consensus of $1.49 billion.

It now foresees $450 million in loss this year – a $125 million more than its previous guidance. Last week, billionaire investor Cathie Wood trimmed her stake in Peloton Interactive.

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