Peloton Dismal Earnings Report Continues Its Really Awful Year

Market experts were expecting a rough quarter for Peloton, but nobody expected it to be this bad.

The connected fitness equipment maker on Tuesday reported a wider-than-expected quarterly loss and a steep decline in sales – an effect of the dwindling pandemic resulting in a substantial decline in consumer demand.

Missteps with branding included a scene in Sex in the City where a popular character died while riding a Peloton. The drop from that incident caused an immediate 11% dip in stock. It was so bad that the team had to put out a press release.

“Mr. Big lived what many would call an extravagant lifestyle — including cocktails, cigars and big steaks — and was at serious risk as he had a previous cardiac event in Season 6,” it read, “These lifestyle choices and perhaps even his family history, which often is a significant factor, were the likely cause of his death.”

Peloton’s shares closed down nearly 9% at $12.90 Tuesday, a new low for the stock. Its market valuation is more than $4 billion after hitting $50 billion early last year.

It generated $594 million in sales from its connected fitness products and $370 million from subscriptions in the latest period.

The company ended the quarter with 2.96 million connected fitness subscribers, representing a net addition of 195,000. Connected fitness subscribers are people who own a piece of the company’s equipment and also pay a fee to access live and on-demand workout classes, ranging from cycling to yoga to meditation.

Average net monthly connected fitness “churn,” which Peloton uses to measure its retention of connected fitness subscribers, improved to 0.75% during the period, compared with 0.79% in the second quarter.

A lower churn rate is good news for Peloton, as it means people are sticking around and continuing to pay for their memberships. The risk that Peloton faces, however, particularly as it hikes subscription prices, is that the churn rate will begin to rise.

Peloton will seek to raise awareness of its digital app, which allows people to pay for access to the company’s workout content without owning a Bike or Tread.

Heading up Peloton’s turnaround is new CEO Barry McCarthy, who took over for embattled co-founder John Foley back in February.

“Turnarounds are hard work,” McCarthy wrote in the company’s shareholder letter. “It’s intellectually challenging, emotionally draining, physically exhausting, and all consuming. It’s a full contact sport.”

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