Shares of Peloton, the stationary bike-maker, fell 6% late Wednesday after the company reported greater losses than expected and an unexpected fall in sales due to a bike recall and seasonality.
The home fitness equipment and fitness streaming company reported an adjusted net loss of $147.8 million for the fourth quarter ended June, more than quadruple the loss of the prior-year quarter. Analysts had expected a loss of $131.5 million.
Revenues of $758.5 million also missed consensus of $774 million, down by 6.7% from the prior-year quarter.
Peloton attributed the weak results to a weaker-than-anticipated demand environment due to the pandemic as well as a recall of its Tread+ product, which saw demand all but evaporate during the quarter. The company admitted that demand for the product was inability to recover due to supply chain constraints and a needed redesign. Furthermore, declines in sales coincided with seasonality in the company’s business and disruption caused by the pandemic.
The company’sDigital Subscription Services revenue grew by a staggering 121% due to a rise in connected fitness subscriber numbers. This growth was driven by an unprecedented spike in demand during a quarter marked by the COVID-19 pandemic and with more people resorting to exercise at home.
“Peloton is delivering an exceptional digital fitness experience to our customers, with a remarkable surge in both engagement and subscribers,” CEO John Foley said in a statement. “We are confident that our investments in content, technology, and innovation will sustain our momentum over the longterm even as we navigate through the pandemic.”
Nevertheless, the current market environment is uncertain and it is unclear how long it could take for the company’s sales to rebound. The pandemic continues to affect operations, manufacturing, supply chains, and customer acquisition across the world and it is uncertain when demand will return to prior levels.
Whether or not the actions of the company will prove to be successful remains to be seen not just the short-term, but in the long run. Peloton will need to remain vigilant in order to navigate through these uncertain times and to ensure it does not lose any competitive ground in the future.
