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Wider-than-expected losses see Peloton stock price dip in pre-market

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Written on Nov 2, 2023
Reading time 3 minutes
  • Although Peloton stock dipped 8% in the pre-market, it is showing signs of rising above yesterdays close.
  • At press time, the PTON stock was trading at $4.81 above yesterday close of $4.76.
  • Besides the quarterly loss, Peloton also gave a lukewarm holiday forecast.

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Peloton Interactive Inc (NASDAQ: PTON), the connected fitness company known for its high-end exercise equipment, faced a disappointing start to its fiscal year with a wider-than-expected quarterly loss and a lukewarm holiday forecast.

The market has responded with an 8% drop in the company’s stock during pre-market trading.

Peloton performance falls short of expectations

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In its first fiscal quarter, Peloton reported a loss of 44 cents per share, missing Wall Street’s expectations of a 34 cents per share loss. This was despite recording a modest revenue increase to $595.5 million, which slightly exceeded the expected $591 million.

However, compared to the previous year, Peloton did show some improvement.

The net loss for the quarter ending on September 30 amounted to $159.3 million, an improvement from the $408.5 million loss reported for the same period in the prior year. However, sales decreased from $616.5 million to $595.5 million.

Peloton’s forecast for the upcoming holiday

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Peloton’s outlook for the upcoming holiday quarter added to the market’s disappointment.

The company anticipates holiday season revenue to fall between $715 million and $750 million. At the midpoint, this represents an 8% drop compared to the previous year, significantly below analysts’ expectations of $763.2 million for the fiscal second quarter.

Peloton’s post-pandemic-era activities

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In its quest to recover its pandemic-era success, Peloton has been implementing various strategies.

Notably, it partnered with Lululemon in late September, allowing Lululemon’s 13 million members access to Peloton’s fitness content through the apparel retailer’s exercise app. This marked a significant shift for Peloton, as the company was willing to share its content with another brand.

Additionally, the fitness company formed a multi-year partnership with the NBA and WNBA to become their official fitness partner. The partnership includes the availability of NBA league pass on Peloton devices and plans for NBA- and WNBA-themed fitness classes.

Peloton has also expanded its product offerings to new markets. It began selling its Row machine in Canada and its Bike and Bike+ in Austria. These efforts are part of CEO Barry McCarthy’s goal to reignite growth and increase membership, ultimately leading to profitability.

Despite the efforts of the CEO, the disappointing financial results, coupled with the conservative holiday forecast, have presented a challenge for Peloton. The company also faced headwinds from a costly recall related to its Bike seat post, which impacted more than 2 million bikes.

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