Peloton shares plunge 20% as losses widen and sales guidance cut
Peloton’s share price crashed 20% in early trading after the exercise bike maker missed revenue targets, cut sales guidance and reported a bigger quarterly loss than anticipated, and its boss described turning the company around as “emotionally draining”.
Peloton, whose market value has fallen by more than 80% over the last year, reported revenues of $964m (£780m), down from $1.26bn in the same quarter last year, as the pandemic-enforced trend for home workouts that fuelled a surge in sales of its hi-tech, internet-connected exercise bikes peters out.
The company, which missed analyst revenue estimates by about $6m in its fiscal third quarter to the end of March, reported a loss of $757m.
“Turnarounds are hard work,” the chief executive, Barry McCarthy, who took over from the co-founder John Foley in February, said in a letter to shareholders. “It’s intellectually challenging, emotionally draining, physically exhausting, and all-consuming. It’s a full-contact sport.”
In January, Peloton said in a message to its 3,200 staff that it needed to “evaluate” its workforce, subsequently cutting thousands of jobs, and indicated it needed to implement production curbs because of a slump in demand.
“The balance sheet challenge has been managing inventory,” said McCarthy, a former chief financial officer at Spotify and Netflix. “We have too much for the current run rate of the business, and that inventory has consumed an enormous amount of cash, more than we expected, which has caused us to rethink our capital structure. Fortunately the obsolescence risk on this is negligible, and we believe the inventory will sell eventually. So this is primarily a cashflow timing issue, not a structural issue.”
Peloton said it expected to report
Read more on theguardian.com
