Peloton Interactive
stock was sinking Thursday after the at-home fitness company reported a loss wider than Wall Street expected and a decline in connected fitness subscribers.
Peloton
(ticker: PTON) reported a fiscal-first-quarter loss of 44 cents a share on revenue of $595.5 million. Analysts surveyed by FactSet had expected the maker of spin bikes to post a loss of 34 cents a share on revenue of $589 million.
In the same period last year, Peloton posted a loss of $1.20 a share on revenue of $617 million.
The company also reported first-quarter paid connected-fitness subscriptions of 2.96 million, which was a 1% decline from the previous quarter. Analysts were expecting 2.99 million connected-fitness subscribers.
Peloton launched its stand-alone app in May. This app included a free option, and the company said on Thursday that more than one million customers downloaded the free version of the app.
“The bad news is we were less successful at engaging and retaining free users and converting them to paying memberships than we expected,” Chief Executive Barry McCarthy said in a letter to shareholders.
Peloton also provided fiscal 2024 revenue outlook of $2.8 billion and connected-fitness subscribers of 3 million, which is about in line with Wall Street expectations. However, the company’s expectations for second-quarter paid connected-fitness subscriptions of 2.98 million missed estimates for 3.02 million.
Shares of Peloton were falling 5.8% in premarket trading Thursday to $4.53. Coming into the session, the stock has tumbled 39% this year.
Peloton was a pandemic winner. The company saw the peak of its success during a time of gym closures and a lockdown on in-person gatherings. But now with gyms open and inflation pinching consumer’s wallets, Peloton has struggled. Shares had tumbled 97% to $4.72 as of the close Wednesday from a record high of $167.42 in January 2021, according to Dow Jones Market Data.
“We believe cracks are forming in Peloton’s ability to grow subscribers,” BofA Securities analyst Curtis Nagle wrote in an Oct. 19 note.
“In our view, shares do not reflect risk to revenue from increased churn due to declining platform engagement and subscriber base that is increasingly at risk as Covid cohorts reach the average subscriber lifetime,” Nagle said. He downgraded Peloton stock to Underperform from Neutral, and cut his price target to $4.15 from $6.50.
Write to Angela Palumbo at [email protected]
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