The Peloton movement may be over. Shares plunge

Peloton investors are going to have to take a meditation class (or several) after its latest earnings report that sent its shares plunging by about a third.

The once-hot fitness company reported late Thursday that sales of its stationary bikes and treads, which makes up 60% of its business, fell 17%. Revenue grew just 6% to $805 million, which was below analysts’ expectations.
In a call with analysts, Peloton’s Chief Financial Officer Jill Woodworth said it’s “clear that we underestimated the reopening impact on our company and the overall industry.”
Simply put, more people are returning to brick-and-mortar gyms or buying a Peloton rival. Planet Fitness (PLNT)’ stock closed 12% higher Thursday after reporting a strong earnings report and revealing that its membership levels nearly returned to its pre-pandemic peak of nearly 16 million. Its stock is up 25% for the year.
Demand for its products are also slower-than-expected, which prompted Peloton (PTON) to cut its full-year sales outlook to $4.4 billion and $4.8 billion, which is about $1 billion less than previously forecast.
Peloton’s move to slash the price its lower-end bike by 20% to $1,495 in August was also a disappointment. “While the price drop led to conversion rates that exceeded our forecast, overall traffic has not met our initial expectations,” admitted Woodworth.
Analysts at Stifel Financial (SF) have slightly soured on Peloton’s future, writing in a note Friday that the firm expects it will take “several quarters to determine a more normalized pace of growth, or more skeptically, whether or not the revised outlook is an indication that the core product may be closer to maturity in existing markets than previously thought.”
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The news wiped away about $9 billion off Peloton’s market value, a stark contrast from 2020 when it was one of the biggest winners from Covid-19. The stock has lost about 60% year-to-date.