Peloton is ‘one of the worst examples of corporate greed’: Eva Ados
- Eva Ados explains why she's strongly bearish on Peloton Interactive Inc.
- The connected fitness company is quitting all in-house manufacturing.
- Peloton stock is currently down about 75% from its year-to-date high.
Peloton Interactive Inc (NASDAQ: PTON) down 75% from its year-to-date high is “not” a buy, says Eva Ados. She’s the Chief Investment Strategist at ERShares.
Ados blasts the management at Peloton Interactive
Peloton is struggling with “growth” now that COVID restrictions have been removed and people are free to return to the gym.
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But Ados attributes the deteriorating fundamentals of the exercise equipment and media company also to “corporate greed”. On CNBC’s “Power Lunch”, she said:
Peloton is one of the worst examples of corporate greed. There was key insider trading of $5.0 million at the top of the market; $400 million in key executive compensation while they had $1.90 billion in losses. That’s why gross margin was dropping.
Peloton Interactive expects to lose up to $120 million in the current fiscal quarter. It’s scheduled to report its Q4 results in the final week of August.
Peloton Interactive is quitting all in-house manufacturing
Also on Tuesday, the connected fitness company said it’s switching entirely to third-party manufacturing, which, as per CEO Barry McCarthy, will help lower costs and simplify the supply chain.
We believe this along with other initiatives will enable us to continue reducing the cash burden on the business and increase our flexibility.
From here on, Taiwan-based Rexon Industrial will manufacture its Bikes and Treadmills. Peloton will also terminate operations at Tonic Fitness for the balance of 2022.
What the announcement means for Precor – a fitness equipment manufacturer it bought for $420 million last year, is yet unclear.