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Peloton Interactive (NASDAQ:PTON) slumped 23% on Thursday and at one point hit an all-time low of $4.17 amid a disappointing forecast and continued challenges for the one-time Wall Street darling.
Peloton sees third fiscal quarter revenue of $700M to $725M versus the $750M consensus and full-year revenue of $2.675B to $2.750B compared to the $2.74B consensus.
For the second fiscal quarter, sales dropped 6.2% year-over-year to $743.6M and paid digital subscribers were down 16% to 718,000. Paid connected fitness subscribers were 3M at the end of the quarter versus 2.96M at the end of FQ1.
“While we continue to outperform the connected fitness market, our biggest challenge continues to be growth, at scale,” Chief Executive Officer Barry McCarthy said in a statement.
McCarthy also cited customer service as a key failure of the quarter.”The member support experience has tarnished our brand, and we simply must do better. The team is currently in the middle of a reboot,” he said. “I’m confident that in the next few months our members will be receiving the level of service they deserve and expect and that we can be proud of.
Buy, buy, buy
Some analysts were less pessimistic than investors.
Citi, which has a Buy rating on Peloton, noted that subscriber numbers and engagement metrics are improving as the company continues to execute on its turnaround. Free cash flow loss also narrowed relative to expectations.
JP Morgan that subscriptions exceeding expectations during the holiday quarter was encouraging. The bank has an Overweight rating on the stock.
“We also like that PTON is better fleshing out what growth initiatives are working (Dick’s/Amazon, Bike rentals, renewed Tread + demand), what’s not (UM co-branded bikes, member support), and what’s still TBD/carly (Lululemon, TikTok),” analysts Doug Anmuth and Bryan Smilek wrote in a note.
“Management expects positive revenue growth in 4QFY24. Still, we look for greater progress on FCF generation in 2H and improvement to the $738M cash balance,” the bank said.
The stock hit a closing record of $167.42 in January 2021.