Peloton (NASDAQ:PTON) stock is having a 2022 to forget. How bad has it been so far?
You know things are bad when the best thing that’s happened to the company is that its signature exercise bike was blamed for the death of a key character in HBO’s new Sex in the City spinoff.
Typically, a TV character collapsing and dying of a heart attack after an energetic workout on a company’s product would be a nightmare for that firm. But if you’re holding PTON stock, you’re already living the nightmare of massive losses over the last few months.
As it turns out, the death of John James “Mr. Big” Preston, the longtime boyfriend-turned-husband of Carrie Bradshaw in the Sex in the City series, was just a blip on the radar for Peloton. That’s because both the series and the company have bigger problems to deal with right now.
Peloton Is Blamed for Mr. Big’s Death
For those of you who don’t follow it, Sex in the City was an HBO show in the late 1990s and 2000s that followed the adventures of four women who were all friends in Manhattan. Sarah Jessica Parker played Carrie, the main character who spent every episode looking for love. Her most frequent love interest, known as Mr. Big, was played by Chris Noth.
The series lasted for six seasons and nearly 100 episodes, plus two movies. Then the series came back this winter on HBO Max with a new title, And Just Like That …
Fans were eager to see what Carrie and her friends (minus actress Kim Cattrall, who declined to return) had been up to over the last decade. And the series kicked off with a bang by killing off Mr. Big in the first episode … after he had worked out on a Peloton bike.
Immediately there was speculation that Peloton had been duped or could take legal action against HBO Max for showing its stationary bike in an unflattering light. And the company even released a bizarre statement speculating that the fictional character hadn’t been in good shape.
“Riding his Peloton bike may have even helped delay his cardiac event,” the company reasoned.
Either way Peloton probably got off light. First, it released a viral YouTube commercial that featured Noth, making light of the situation.
But then the buzz surrounding Peloton and the show was eclipsed by reports of multiple women accusing Noth of abuse. The show distanced itself from Noth, and Peloton was forced to take the commercial down.
PTON Stock at a Glance
As it turns out, Peloton has a bigger problem than Chris Noth and Mr. Big: The company’s stationary bikes are quickly falling out of favor with consumers.
Peloton was going strong in 2020 during the early months of the Covid-19 pandemic. But now gyms are open again, and people don’t feel trapped at home. The change hurt PTON stock.
The company’s most recent earnings report was horrific, sending the shares down 30%, as the company reported a larger-than-expected loss for its fiscal first quarter. And it lowered its outlook for the full year. Peloton acknowledged that the demand for exercise bikes and treadmills was weakening, but it added that ongoing supply chain problems had also negatively impacted its results.
Peleton’s Q1 revenue came in at $805.2 million, below analysts’ average outlook of $810.7 million. Its loss per share was $1.25, which was worse than analysts’ mean estimate of a loss of $1.07 per share.
The company’s revenue from fitness products fell 17% versus the same period a year earlier to $501 million.
Peloton ended the year by receiving a downgrade from JMP Securities, which cut PTON stock from “market outperform” to “market perform.” All in all, Peloton’s shares fell by 76% in 2021.
The Bottom Line
Mr. Big is just a memory, but Peloton stock is having a hard time shaking off the bad mojo. KeyBanc analyst Edward Yuma recently noted that the company has been delivering its Bike and Bike+ products more quickly, so perhaps it is getting a handle on its supply chain problems. Peleton also heavily discounted products for the holiday shopping season in an effort to boost its sales.
But Peloton has a long way to go to make up for lost time. Already in 2022, the stock is down by 12.5%.
Until the company starts showing some signs of life, its stock is a falling knife that’s best avoided.
On the date of publication, Patrick Sanders 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.
Patrick Sanders is a freelance writer and editor in Maryland, and from 2015 to 2019 was head of the investment advice section at U.S. News & World Report. Follow him on Twitter at @1patricksanders.