(SILVER SPRING Md. — Peloton suffered its worst day as a publicly traded company Friday after telling investors that it will likely lose more money than it had expected in fiscal 2022.
Peloton flourished under the epidemic. The company recorded its first profitable quarter due to Americans being unable to get to the gym. Instead, they set up workout rooms at their homes. The company’s high-end treadmills and bikes saw sales soar, as well as subscriptions to its interactive online classes.
These sky-high sales were stopped by the COVID-19 vaccines. The gyms were reopened with restrictions and now people can start to spend more money on other items, such as travel or restaurants.
On Thursday night, the New York City firm said it expected those lucrative subscriptions’ to fall 6%. It also expects losses of $425 million to $475 million in 2022. That’s a lot more red ink than its previous guidance of $325 million in losses.
Peloton faces other challenges. It’s wrestling with the same snarled global supply chains that have plagued manufacturers this year as economies reopen. What’s more, gyms that had closed during the pandemic began offering their own virtual classes, further encroaching on one of the company’s greatest strengths.
The company is currently undergoing a recall of the treadmill it used after it was connected to the death of a child as well as numerous other 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 fiscal 2021 would be a challenging task, and that has certainly proven to be true,” CEO John Foley told investors on a conference call.
After a record-breaking $171.71, shares plunged 33% Friday to $60.14. It was the worst trading day in 10 months.
Peloton’s early success also brought new competition, companies that offered cheaper bicycles and exercise equipment. In August, the company cut the price of its Peloton Bike — its marquee technology — to $1,495 from $1,895.
Learn More A Return to low-cost fitness activities has been prompted by the pandemic
Industry analysts were quick to cut expectations for the company Friday, with one citing “rapid deterioration” in Peloton’s guidance for next year.
Scott Devitt from Stifel stated that he was confident Peloton will continue growing, even though there is a pandemic in the rearview. He has reexamined that belief.
“Now, given the materially lower expectations, we expect it will take several quarters to determine a more normalized pace of growth, or more skeptically, whether or not the revised outlook is an indication that the core product may be closer to maturity in existing markets than previously thought,” Devitt wrote to clients.
Peloton’s first quarter fiscal 2022 sales were $805m, which is close to Wall Street goals. But Wall Street focused on what’s to come. Wall Street focused on what’s to come, and the company reduced its expectations for sales to $4.4 billion to $4.8billion in 2022. This is well below analysts’ forecast of $5.3billion.