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Peloton (PTON) Shares Fall 27% Following Sales Loss and Low Subscriber Growth for Fiscal Q4 2023
American exercise equipment company Peloton Interactive (NASDAQ: PTON) saw its shares plunge nearly 30% in premarket trading after it posted disappointing figures for fiscal Q4 2023. As of this writing, Peloton stock is trading at $5.07, down 27.61%, according to data from MarketWatch.
Peloton did not meet expectations for loss per share according to analysts polled by Refinitiv but scaled revenue expectations. Peloton’s loss per share came in at 68 cents, much higher than the 38 cents expected, while revenue recorded was $642.1 million, over the expected $639.9 million.
Other figures include a 5.3% loss in sales from last year’s $678.7 million to $642.1 million. However, Peloton recorded a significantly reduced net loss of 68 cents per share or $241.8 million, versus $3.72 per share or $1.26 billion from the previous year.
Peloton attributed a fall in subscriber growth for Q4 2023 to a recall announced in May. The United States Consumer Product Safety Commission (CPSC) recalled over two million Peloton bikes over concerns about reported falls and injuries. Between January 2018 and May, Peloton got 35 reports of seats suddenly breaking on the Model Number PL01 bikes. Both Peloton and the CPSC said the seat posts on these bikes sometimes detach and break while in use. Of the 35 reports, there were 12 injuries, including a wrist fracture. Consequently, the CPSC recalled more than two million units of the bike sold in the reported period.
In 2021, Peloton recalled several treadmills following multiple recorded accidents, including the death of a child.
In a recent letter, McCarthy provided more details on the slowdown in a recent letter to shareholders. According to the CEO:
“Peloton’s FYQ4 performance is a reminder we operate a seasonal business. The slowdown exceeded our expectations through May and through the first three weeks of June as consumer spending shifted toward travel and experiences. Then eight weeks ago the trend reversed itself, and we began to see a reacceleration in hardware sales.”
Peloton Expected Q4 2023 Slowdown
Peloton’s Q4 2023 figures may not have been surprising for the company. Back in May, Peloton CEO Barry McCarthy had cautioned that growth in Q4 may be challenging. According to the CEO, Q4 is usually difficult because warmer weather and vacations typically take people away from their bikes as users may exercise less. At the time, Peloton said it expected subscribers to hit a range of 3.08 million to 3.09 million. It was the first time the company announced a predicted decline in subscriber growth.
Interestingly, McCarthy also had a positive outlook at the time. In a May letter to shareholders, the CEO said customers were receptive to the company’s new plans. These include a rent-to-buy plan and the sale of cheaper and pre-owned bikes.
Now, McCarthy is working hard trying to pull the company into growth. Peloton announced a new pricing range for its fitness app in May. While there is an unlimited option for free membership, there are also tiers with monthly costs of $12.99 and $24.
Peloton (PTON) Shares Fall 27% Following Sales Loss and Low Subscriber Growth for Fiscal Q4 2023
