And they cost less, than at the IPO in September 2019
20 January 2022 shares of the American manufacturer of exercise equipment Peloton Interactive fell on 23,9%. The reason was a CNBC publication based on internal documents of the company about, that Peloton is suspending its products due to declining demand.
What CNBC and other sources say
From internal Peloton documents, captured by CNBC, should, that the company will not release the Bike simulator in February and March. At the same time, the release of the more expensive Bike + simulator was stopped in December and will not be resumed until June 2022..
The Tread simulator will not be released from February for six weeks. The Tread+ model has not been released since last year due to security concerns.. The company does not expect, which will resume production of this model in fiscal year 2022.
In an internal presentation, Peloton claims, that the demand for fitness equipment has dropped markedly around the world: consumers are price sensitive, and the activity of competitors increased. The company misjudged future demand - and now thousands of simulators are stored in warehouses and cargo ships.
Peloton CEO John Foley said, that the company is trying to reduce costs and increase profitability. CNBC previously wrote, that Peloton hired McKinsey consultants, to review the company's cost structure and, maybe, fire some employees.
The Wall Street Journal complements, what's tonight 20 January the head of Peloton, John Foley, sent a letter to employees of the company. In his mind, data on the suspension of the production of simulators, published by CNBC, incomplete and do not reflect the company's strategy. He claims, that the company will change the volume of production for the sake of sustainable growth, but also mentions the likely reduction in staff.
Also 20 January Peloton released preliminary results for the second quarter of fiscal year 2022. Expected, what is the revenue for the period, ended 31 December 2021, will amount to 1.14 billion dollars - previously it was assumed from 1,1 up to 1.2 billion. Adjusted EBITDA will be from -260 to -270 million dollars, while previously expected, that it will be from -325 to -370 million. Net loss for the quarter could range from $423 million to $481 million.
Second quarter report to be released 8 February after the end of trading on the US stock market.
How investors reacted
For 20 January Peloton stock quotes on Nasdaq dropped by almost 24% — with 31,84 $ evening of the previous day 24,22 $ by the end of the main auction. During the day, the fall reached 25%: stocks went down 23,9 $ for pike.
During the post-market, shares rose slightly relative to the end of the main trades.. But even with this, Peloton shares are cheaper, than in September 2019, when they appeared on the market. As CNBC recalls, papers then began to trade at 29 $.
Peloton quotes increased several times during 2020 against the backdrop of a pandemic and lockdowns in many countries, reaching highs in December 2020. At that time the shares were over 167 $. Then they gradually began to fall, And, for example, only at the beginning of November 2021 they lost 35% due to rising losses and lower sales forecast for FY 2022.
