Shares of Peloton Interactive (NASDAQ: PTON) were sent plummeting on Thursday and Friday after the company reported deepening financial losses for its fiscal Q4.
Peloton has been hurting badly as it struggles to right itself after consumer demand for at-home fitness products dropped significantly as COVID-19 restrictions waned, with this being the sixth consecutive quarter that the company has reported a loss.
The bleak earnings report also happened to follow an announcement from Peloton that it would begin selling its products on Amazon (NASDAQ: AMZN), the company's first partnership with a major retailer.
The partnership announcement gave Peloton shares a 10.5% boost in pre-market trading on Wednesday, with shares grabbing an additional 8.9% gain during trading hours. The release of Q4 earnings on Thursday saw an immediate reversal, with shares dropping 21% through the end of the week.
Peloton's Dour Quarter in Numbers
Peloton's total revenue came in at roughly $679 million, a 30% drop compared to Q3 2022's $964 million. That figure came in well short of Wall Street's estimate of $718 million.
The company's total gross margin slipped into the red, sitting at -4.4%, a considerable drop compared to last quarter's margin of 19.1%. Peloton's subscription gross margin modestly declined from 68.1% to 67.9%, though the gross margin on connected fitness products drastically dropped from -11.4% to -98.1%.
Peloton suffered a net loss of $1.2 billion, a substantial 64% drop from last quarter. Losses per share came in at $3.68, compared to a $1.05 loss the previous quarter.
Subscriptions remained flat compared to the previous quarter, though the number of total members decreased from 7 million to 6.9 million, with Peloton giving a rough figure of 143,000 members lost.
Peloton did not offer any financial guidance for the upcoming 2023 fiscal year.
It's Been a Rocky Turnaround for Peloton
To the credit of Peloton and CEO Barry McCarthy, the company hasn't taken its situation lightly. A few analysts have taken a positive stance on McCarthy, commending his far-reaching decisions to stop the company's losses.
Peloton has outsourced much of its customer support, laid off workers, and shuttered in-house production of its exercise equipment as part of cost cutting measures affected by McCarthy. The company slashed the price of its exercise bikes while raising subscription prices in a move to attract customers.
None of the company's changes have produced any tangible results yet. While analysts have recognized McCarthy's efforts, not many appear to have a favorable outlook for the company's future.
Peloton faces a growing number of competitors that have begun to employ a similar product model, diluting any chances it has at a full comeback. In addition to newer companies like Equinox Fitness, established fitness brands have developed their own subscription-based platforms to offer virtual training, such as Nordictrack iFIT.