Peloton Plunges on Earnings, Guidance Miss; Analyst Sees 'Very Few Things to Cheer About'

© Reuters Peloton (PTON) Plunges on Earnings, Guidance Miss; Analyst Sees 'Very Few Things to Cheer About'

By Senad Karaahmetovic

Shares of Peloton Interactive (NASDAQ:PTON) are down over 13% in Thursday premarket trading after the fitness subscription company reported disappointing earnings and forecast.

Peloton reported an FQ4 EPS loss of $3.68, significantly worse than the expected loss of $0.76. Revenue for the quarter came in at $678.7 million versus the consensus estimate of $682.4 million.

For this quarter, Peloton sees revenues in the range of $625 to $650 million, again much lower than the consensus of $783.3 million.

“Given broader macroeconomic uncertainties and the pace and number of changes we’re making to our business, we will be restricting our formal revenue, gross margin, adjusted EBITDA, capex and net subscriber addition guidance to the current quarter for at least the duration of FY23,” the company said in a client note.

The company added that it expects “the market for connected fitness to remain challenging for the foreseeable future in FY23.”

A Telsey Advisory Group analyst noted the continued unpredictability that investors face as far as Peloton is concerned.

A Needham & Company analyst sees “a lot of moving pieces” with Peloton.

“There could be sequential tailwinds from price increases, rightsizing and outsourcing the Member Support team and moving last mile logistics to third parties in the US and shutting down owned manufacturing activities in Taiwan,” the analyst told clients in a note.

A BMO analyst reiterated an Underperform rating on PTON and a $12 per share price target.

“We've always believed PTON created a compelling community for its loyalists, but one that was increasingly saturated. We fear today’s announcement shows PTON may be working to improve its cash bleed, but faces a brand saturation issue. Defense is great, but is it worth this market cap?”

Finally, analysts at MKM Partners see “very few things to cheer about in today’s press release.”

“Moreover, the company remains thinly capitalized, given inventory levels and ongoing cash burn, despite layoffs and restructuring,” they wrote in a note.