Peloton, in a quarterly earnings report released on Today, revealed a larger-than-expected loss and a dramatic fall in revenue, as inventories piled up in warehouses and drained the company's financial reserves.
In addition, the linked fitness equipment manufacturer provided a negative sales forecast for the fourth quarter, citing weaker demand. Due to the planned subscription price increases, the company predicts that a number of subscribers will terminate their monthly memberships.
Following an all-time low on Monday, the company's stock dropped more than 29% in premarket trade on Tuesday. As of writing, Peloton Interactive's stock price is at $ 11.82 on NAasdaq, according to MarketWatch.
Peloton's Decline
Peloton's losses increased to $757.1 million, or $2.27 per share, in the third quarter, compared to a net loss of $8.6 million, or $0.03 per share, in the same period the previous year. According to CNBC, this was a greater loss per share than the $0.83 they had predicted.
In the same period the previous year, revenue decreased to $964.3 million from $1.26 billion. That fell short of analysts' projections of $972.9 million, and it was the first year-over-year fall in revenue for the company since it went public in 2019.
Specifically, the business stated that the loss was mostly caused by a significant decrease in customer demand during the coming-off peak of the COVID-19 outbreak. According to the company, increasing treadmill sales helped to counteract this.
The company, on the other hand, stated that it experienced greater than expected returns on its Tread+ machine, which totaled approximately $18 million and negatively impacted the company's profitability in the quarter.
Peloton Restructure
Peloton is under a massive shakeup and restructuring after the company hired the new CEO, Barry McCarthy. As previously reported here in February, John Foley, the previous CEO and one of the co-founders of Peloton stepped down from his position as CEO of Peloton and instead positioned himself as executive chair.
McCarthy might sound very familiar to numerous tech and business enthusiasts, as he once also served both Spotify and Netflix. Barry McCarthy will be replacing Foley. Aside from being CEO, McCarthy will also serve as president and will also join the board of directors of Peloton.
When he was appointed, Peloton was reported to be cutting costs and reshuffling its board of directors.
During the same period in February, the company officially disclosed that it intended to cut around 2,800 people from its workforce.
This layoff is also part of the company's response to the drop in demand and growing losses that have resulted in this decision.
Peloton's Newest Prices
Last month, Peloton implemented a new set of prices for both the services they offer and their workout equipment.
Having appointed Barry McCarthy as its new CEO and having been in control of the company for slightly more than two months, Peloton is implementing significant changes in its processes.
Even though the price of Peloton is going up, the company is lowering the prices of its exercise machines like the Bike, the Bike+, and the Tread.
Due to increased demand, Peloton is boosting the monthly charge for its on-demand exercise content for the first time in the company's history in order to attract additional subscribers. Peloton stated that the price changes are driven by their choice to focus on building a library of content for a global audience.
