Peloton hits the wall after sprinting through pandemic
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.
The exercise bike and treadmill company thrived during the pandemic, recording its first and only profitable quarters. It benefited from Americans, unable to hit the gym, instead setting up places to work out at home. Sales of its high-end bikes and treadmills soared, as did subscriptions for its online, interactive classes.
Those sky-high sales have stalled, however, since the rollout of COVID-19 vaccines. Gyms have re-opened, with some restrictions, and people are beginning to spend money on other things, like travel and restaurants.
Late Thursday, the New York City company said that it expects those lucrative subscriptions to drop 6% and losses in 2022 of between $425 million and $475 million. That’s a lot more red ink than its previous guidance of $325 million in losses.
Peloton has other problems. 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.
It is also recovering from a recall of its treadmill machine, something it had fought, after it was linked to a death of a child and numerous 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.
Peloton’s stock fell $30.42, or 35%, to close Friday at $56.64. It was the worst trading day for the company just 10 months after its shares hit an all-time high above $171.
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.