Peloton falls after posting huge loss and weak guidance

Peloton has reported a wider-than-expected quarterly loss and a steep decline in sales.

Peloton was dragged down as inventory piled up in warehouses and ate away at the company’s cash.

The fitness equipment maker also offered up a weak sales outlook for the fiscal fourth quarter, weaker demand the cause.

The company anticipates planned subscription price hikes may lead some users to cancel their monthly memberships.

Peloton lost $2.27 per share. Analysts has expected 83 cents. Its revenue also fell to $964.3 million versus $972.9 million that was expected.

Peloton said the drop was primarily driven by a steep reduction in consumer demand coming off of the Covid-19 pandemic’s peak. That was partially offset by higher treadmill sales, it said.

But Peloton also noted that it faced higher-than-anticipated returns of its Tread+ machine, which was recalled last May, that totaled about $18 million and weighed on the company’s results in the quarter.

Peloton generated $594 million in sales from its connected fitness products and $370 million from subscriptions in the latest period.

The company ended the quarter with 2.96 million connected fitness subscribers, representing a net addition of 195,000.

Shares of the company were down more than 15% in early trading Tuesday after earlier hitting a fresh all-time low, dragging its market cap under $4 billion.

Peloton is calling for fourth-quarter revenue to be between $675 million and $700 million. Analysts had been looking for $821.7 million.

The company expects connected fitness subscribers to total 2.98 million, which would represent just a 1% increase from the third quarter.