Peloton shares plunge on wider than expected loss, weak revenue guidance

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Peloton reported a wider-than-expected loss in its fiscal first quarter and provided a weaker holiday outlook, causing its stock price to plunge on Thursday.

The fitness equipment giant posted a net loss of $408.5 million, or $1.20 per share, on total revenue of $616.5 million. Analysts surveyed by Refinitiv were expecting a loss of 64 cents per share on $650.1 million in revenue.

Subscription revenue came in at $412.3 million, while connected fitness product revenue came in at $204.2 million. As of the end of the second quarter, Peloton has a total of 6.7 million members and 2.97 million Connected Fitness subscribers.

The latest results come as Peloton has been working to turn around its business following the fizzling out of its pandemic-era demand. Peloton CEO Barry McCarthy said in the company's quarterly letter to shareholders that its turnaround effort is a "work in progress" with $199 million in first quarter recall reserves, restructuring and impairment expenses, but that the "ship is turning."

Ticker	Security	Last	Change	Change %
PTON	PELOTON INTERACTIVE INC.	8.49	-0.14	-1.58%

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Jen Van Santvoord rides her Peloton exercise bike at her home on April 7, 2020, in San Anselmo, California. (Photo by Ezra Shaw/Getty Images) | Getty Images

In February, Peloton laid off 2,800 employees globally and announced it would embark on an $800 million restructuring program. In August, Peloton laid off another 784 employees and said it would raise prices on its Bike and Tread+ products, significantly reduce its North American retail footprint and eliminate its final mile distribution network. 

Additionally, the company secured $750 million in financing, maintained a liquid cash balance of more than $1 million, outsourced its Peloton Bike and Tread production in Taiwan, expanded its product portfolio with a $3,195 rowing machine and forged partnerships with Hilton, Dick's Sporting Goods and Amazon. 

Ticker	Security	Last	Change	Change %
HLT	HILTON WORLDWIDE HOLDINGS INC.	129.16	-0.59	-0.45%
DKS	DICK’S SPORTING GOODS INC.	111.76	+0.52	+0.47%
AMZN	AMAZON.COM INC.	90.85	-1.27	-1.38%

In October, the company said that the vast majority of its restructuring was complete after laying off another 500 employees. 

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Peloton is aiming to reach break-even cash flow by the end of fiscal year 2023. Free cash flow in the first quarter was negative $246.3 million, compared to negative $411.9 million in the previous quarter and negative $651.9 million a year ago.

Looking ahead, Peloton expects to have a total of 3 million connected fitness subscribers in the second quarter of 2023, up slightly from the 2.97 million in the first quarter.

Total revenue for the second quarter is expected to range between $700 million and $725 million, below analysts’ estimates of $874 million. In addition, the company anticipates approximately $70 million in additional restructuring-related cash charges over the course of fiscal year 2023.

Peloton stock is down approximately 78% year to date.

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