Shareholders of Peloton (NASDAQ:PTON) stock should brace for a rough time today following disappointing quarterly results and weak forward guidance from the connected fitness company.
PTON stock is down more than 30% this morning after the company reported a larger-than-expected loss in its fiscal first quarter. Worse, the New York City-based company lowered its outlook for the full fiscal year, citing weakening demand for its exercise bikes and treadmills and ongoing supply chain issues.
What Happened With Peloton Stock
Peloton really disappointed shareholders after the bell yesterday. It announced a loss per share of $1.25, wider than the $1.07 that analysts expected. Its revenue also flopped, coming in at $805.2 million against expectations for $810.7 million. Peloton’s sales have now slowed considerably from the 250% surge the company enjoyed in the first quarter of 2020 when Covid-19 led consumers to exercise at home. At one point, the New York Times declared consumers were panic-buying Peloton bikes.
Now, with reopening underway, sales of its fitness products like its bikes and treadmills fell to $501 million, down 17%.
In a lone bright spot for the company, Peloton announced that its subscription revenue grew 94% to $304.1 million in the quarter. But those subscribers were less active. The company said its connected fitness subscribers completed 16.6 workouts per month. That is down from 20.7 workouts a month a year earlier.
Perhaps most painful for Peloton stock holders is the fact that the company lowered its forward guidance. It now estimates it will grow its subscriber count to between 2.8 million and 2.85 million subscribers in Q2. It is also forecasting sales between $1.1 billion and$1.2 billion.
Why It Matters
Things have clearly gone from bad to worse for Peloton. Before today’s decline, PTON stock was already 50% below its 52-week high of $171.09. At $86 a share, the stock has continued to decline steadily throughout this year. When the market opened today, the share price fell off a cliff, further exacerbating the pain for current Peloton shareholders. And, perhaps worst of all, the outlook for Peloton looks to be challenging for the foreseeable future.
More broadly, Peloton serves as a bellwether for stay-at-home stocks that thrived during the pandemic. Other stocks that surged during the pandemic could move lower today in tandem with PTON stock. With the economy reopening and people returning to public gyms and private fitness centers, Peloton is likely to continue struggling.
The same could be said for video conference companies, streaming services, online retailers and other stocks that were viewed as essential at the height of the global pandemic.
What’s Next for PTON?
PTON stock is going to take a big hit today. The question is how steep the drop is and how long it takes for the stock to recover. In the near term, the company’s share price is likely to remain depressed. More broadly, Peloton’s decline could pull down other stocks that are viewed to be tied to the pandemic.
Investors should plan to adjust their portfolios as needed today and in the coming weeks.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
