Peloton plunges as much as 33% in pre-market as the reopening drags down sales

Peloton slashed the price of its bike but the approach bore little fruit.

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• Peloton stock plunged as much as 33% in pre-market trading after its fiscal first-quarter earnings.
• It is struggling as the economy reopens and more people return to gyms and buy competitor products.
• The exercise equipment company swung to a loss and slashed its sales and subscriber forecasts.

Peloton crashed as much as 33% in pre-market trading on Friday after it posted a bigger-than-expected loss and slashed its earnings outlook in its latest quarterly earnings, as the reopening weighed on the company.

The stock was trading 32.6% lower at $57.98 a share in pre-market. It closed on Thursday at $86.03 per share.

Peloton disappointed investors with its first-quarter fiscal earnings, reporting a net loss of $376 million or $1.25 a share, compared to a profit of $0.24 per share a year earlier. Analysts had been expecting a loss of $1.07 per share, according to Refinitiv.

The exercise equipment company also revealed a gloomy outlook, slashing its forecasts for subscribers and sales. Peloton now expects revenue to range between $4.4 billion and $4.8 billion, compared to an earlier prediction of $5.4 billion.

Peloton flourished in the pandemic, as millions of people in lockdown around the world turned to the company to help them stay fit at home. Sales soared 250% in the first quarter of 2020.

But the company is struggling now the global economy is reopening and people have the option to return to gyms and competitors launch similar, cheaper products. Its stock has fallen more than 43% so far in 2021.

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"It is clear that we underestimated the reopening impact on our company and the overall industry," Peloton boss John Foley said in a call with shareholders.

Peloton slashed the price of its bike in August by 20% to $1,495, but the approach bore little fruit in the fiscal first-quarter. Sales of connected fitness products fell 17% year-on-year to $501 million despite a big jump in marketing expenses.

"While the price drop led to conversion rates that exceeded our forecast, overall traffic has not met our initial expectations," Foley said.

Analysts at Wedbush said the company has a lot of work ahead to build up awareness of its treadmill product in time for the Christmas sales season.

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