Saturday, December 4, 2021

Peloton crashed into wall after sprint amid pandemic

SILVER SPRING, Maryland (AP) – Peloton experienced its worst day as a public company on Friday after telling investors it will likely lose more money than it anticipated in fiscal 2022.

The exercise bike and treadmill company thrived during the pandemic, fixing its first and only profitable quarters. This was facilitated by the fact that Americans could not go to the gym, and instead created places to work out at home. Sales of high-end bicycles and treadmills soared, as well as subscriptions to interactive online classes.

However, these sky-high sales have stalled since the introduction of the COVID-19 vaccine. Gyms have reopened with some restrictions and people are starting to spend money on other things like travel and restaurants.

Late Thursday, the New York-based company said it expects those profitable subscriptions to fall 6%, with losses in 2022 ranging from $ 425 million to $ 475 million. That’s a lot more red ink than his previous forecast of $ 325 million in damages.

The Peloton has other problems. It is grappling with the same global supply chain challenges that have plagued manufacturers this year amid a resurgent economy. What’s more, gyms closed during the pandemic began offering their own virtual classrooms, further encroaching on one of the company’s greatest strengths.

He is also recovering from a recall of his treadmill, which he struggled with after being linked to the death of a child and multiple injuries.

“Given the unprecedented circumstances presented by the global pandemic, we said last quarter that modeling the exit from COVID and the massive growth we saw in FY2021 will be challenging, and this has certainly proven true,” said CEO John Foley … conference call investors.

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Peloton shares fell $ 30.42, or 35%, to close Friday at $ 56.64. It was the company’s worst trading day just 10 months after its stock hit an all-time high above $ 171.

Peloton’s early success also led to new competitors offering cheaper bikes and exercise equipment. In August, the company lowered the price of its Peloton Bike – its proprietary technology – to $ 1,495 from $ 1,895.

Industry analysts were quick to cut the company’s expectations on Friday, with one citing a “rapid deterioration” in Peloton’s forecasts for next year.

Stifel’s Scott DeWitt said he believed Peloton would continue to grow despite the worst of the pandemic, seemingly reflected in the rearview mirror. He is revising this opinion.

“Now, given the substantially lower expectations, we expect it will take several quarters to determine a more normalized growth rate, or, more skeptically, whether the revised outlook would indicate that the core product may be closer to maturity in existing markets. than previously thought, “DeWitt wrote to clients.

Peloton reported $ 805 million in sales for the first quarter of fiscal 2022, close to most Wall Street targets. But Wall Street has focused on what’s next. The company lowered its sales expectations to a range of $ 4.4 billion to $ 4.8 billion in 2022, well below analysts’ forecasts of $ 5.3 billion.

Nation World News Desk
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