Peloton shares plunge by 20% as losses rise and targets are missed

Peloton’s shares have taken another hit and plunged by 20% as Q1 results reveal that it missed revenue targets, cut sales guidance and reported a bigger quarterly loss than anticipated.

The tech fitness company‘s market value has fallen by more than 80% over the last year as the popularity it enjoyed during the pandemic has tailed off.

It reported revenues of £780m ($964m) in the first three months of 2022, down 24% from $1.26bn in the same quarter last year. Losses soared to $757m in the same period – up from $8.6m from 2021.

Shares have already tumbled by around 60% this year but sank to record lows following the news.

Read more: Pressure building for Peloton CEO as share price hits all time low

New boss Barry McCarthy – who replaced the previous chief executive in February – described turning the company around as “emotionally draining”. He told investors: “Turnarounds are hard”.

The firm, which claims around 7 million members, also stated that subscription revenue was up 55% from last year. However, prices will be raising later this year which is likely to cause some to cancel the service.

“Early indicators are that the churn related to that will be low, but we won’t know until we know,” said McCarthy.

Investors were also warned that that growth will remain difficult, forecasting revenue for the upcoming quarter between $675m and $700m – around $6m less than analyst forecasts had previously predicted.

“The balance sheet challenge has been managing inventory,” said McCarthy, who previously worked at both Spotify and Netflix,

He described the difficulties as a “cashflow timing issue, not a structural issue”, saying: “We have too much for the current run rate of the business, and that inventory has consumed an enormous amount of cash, more than we expected, which has caused us to rethink our capital structure.”

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