Peloton Interactive
These rumors overshadowed the news that CEO John Foley would be stepping down from the company as part of its restructuring efforts. The company also lowered its full-year revenue outlook and cut 2,500 jobs which makes the stock's recent rally even more ironic and bittersweet.
Peloton now sees its fiscal 2022 revenue coming in between $3.7 billion a $3.8 billion which is down from its previous range of $4.4 billion to $4.8 billion. It also downgraded its estimates of connected fitness subscribers from 3.4 million to 3 million.
The company's earnings report also confirmed its downward trajectory as it reported a loss of $1.39 per share, while the company had a profit of $0.18 per share last year.
Revenue was up 6% to $1.13 billion from $1.06 billion. Revenue from its connected segment declined by 8% which is another troubling sign as it makes up 70% of Peloton's business.
Currently, Peloton is focused on survival as it aggressively cuts costs including the slowing and halting of manufacturing of some products due to low demand. The bear case for Peloton was always that it was another fitness fad that became a bubble due to the pandemic and some investors believing it was a tech stock rather than a fitness company.
Even after its decline, the company remains quite expensive with a market cap of $12 billion and $3 billion in sales and signs that sales could be peaking or trending lower. Further, the company continues to grow subscribers but this figure could recede in the future.
That's why Peloton makes sense as a buyout target for companies that may want to increase their share of the fitness market. Both Nike and Amazon are reportedly considering making an offer for the company. The deal would be much easier for Amazon to swallow given its $100 billion in cash while Nike's is closer to $10 billion. However, it's also likely that Peloton could keep sinking in the coming weeks as its business continues to lose steam.
