Peloton (NASDAQ:PTON) stock gave back most of the 20% gain it got from selling on Amazon (NASDAQ:AMZN) overnight as fourth-quarter earnings disappointed.
The maker of Internet-connected exercise equipment lost $1.24 billion, $3.68/share, on a revenue of $678 million. It was the company’s sixth straight quarterly loss.
CEO Barry McCarthy, who has been trying to right the ship since February, blamed supply chain issues and efforts to reduce fixed costs. The stock was selling early Thursday at $11.40/share, down almost 16% from its Aug. 24 close.
Glass Half Full
Peloton was a Covid-19 pandemic star. The stock sold for over $160/share at the end of 2020. Its online instructors were treated as celebrities.
For shareholders, the news could have been worse. Before the Amazon deal was announced Peloton stock was trading below $11. Peloton said it is now selling its bikes, accessories, and apparel on Amazon, with bike delivery available in most of the U.S.
Under McCarthy, Peloton has laid off thousands of workers, raised prices and membership fees, transferred production to third parties and halted last-mile deliveries. His letter to shareholders admitted that bears see “a melting pot of declining revenue, negative gross margin, and deeper operating losses.” He said he sees “significant progress driving our comeback and Peloton’s long-term resilience.” But he declined to offer predictions for fiscal 2023, saying only subscriptions should be flat and revenue total $625-$650 million.
The good news in the report is that subscription revenue now exceeds product revenue at $383 million. It was up 36% over the last year. That side of the business saw profits of $260 million in the quarter.
PTON Stock: What Happens Now?
With a market capitalization entering Aug. 25 of about $3.9 billion, Peloton is now selling for less than expected fiscal 2023 revenue. If McCarthy can create earnings out of the remaining revenue, the stock could rise.
The 13 analysts following Peloton at Tipranks still have it rated a “moderate buy,” with 6 of 12 telling investors to buy it, and a price target of $18.15.
On the date of publication, Dana Blankenhorn held a long position in AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
