By Dhirendra Tripathi
Investing.com – Peloton stock (NASDAQ:PTON) plunged 33% in Friday’s premarket trading as a fading pandemic-era boom for home fitness weakened rapidly.
The company lowered its annual guidance by as much as $1 billion, saying it had underestimated the speed at which people would return to pre-Covid habits.
The company now expects annual sales of no more than $4.8 billion and as little as $4.4 billion, which would be a neat billion dollar less than the projection it gave less than three months back.
There were other headwinds too, arguably some of its own doing, as its attempts to tap the mass market fell flat. The company cut the prices of its flagship exercise Bike during the period to lure a younger audience but struggled to overcome the image it had previously cultivated of being a maker of high-end items.
The costs of promoting more affordable Bikes and treadmills more than doubled, meanwhile, eating into profitability.
Sales and marketing expense was $284 million, representing around 35% of total revenue, up from just over 15% a year earlier. Revenue by contrast rose only 6% to $805.2 million, driven by 94% growth in subscription revenue. Fewer deliveries of Bikes hurt and so did charges related to safety-related recalls of Tread and Tread+ products.
Adjusted profit per share was $1.25. As with sales, that too disappointed analysts.
In the ongoing quarter, Peloton expects $1.15 billion in revenue at the midpoint of its guidance range..