Peloton Interactive
stock fell to a new low after the at-home fitness company reported a drop in subscribers during its fiscal fourth quarter and provided a disappointing outlook for the current three months.
Peloton
(ticker: PTON) said in a letter to shareholders Wednesday that subscribers declined by 29,000 from the previous quarter to 3.08 million. The decline was more than the company anticipated, but Peloton had said in its third-quarter letter to shareholders that it was expecting a decline in subscriber growth for the fourth quarter because fewer people purchase workout equipment in the warmer months.
“The slowdown exceeded our expectations through May and through the first three weeks of June as consumer spending shifted toward travel and experiences,” Chief Executive Barry McCarthy said in the letter. Hardware sales began to reaccelerate eight weeks ago, he said.
Peloton also said that a seat recall it announced on May 11 will cost $40 million more than it expected, and that 15,000 to 20,000 people affected elected to pause their monthly subscriptions while waiting to receive a replacement part.
The company reported a fiscal fourth-quarter loss of 68 cents a share from revenue of $642.1 million. Analysts surveyed by FactSet were expecting the maker of exercise equipment to report a fourth-quarter loss of 40 cents a share from revenue of $641 million.
Peloton added that it achieved positive free cash flow in the fourth quarter, but said that as a result of factors like the seasonality of hardware sales and marketing costs, it doesn’t anticipate to remain cash-flow-positive in the two upcoming quarters.
For the current quarter, Peloton expects revenue of between $580 million to $600 million, compared with the FactSet consensus of $647 million. Peloton also estimated it will have between 2.95 million and 2.96 million connected fitness subscribers in the first quarter, while analysts expected 3.08 million.
Shares of Peloton were down 21% Wednesday to $5.56, and were on pace to hit a record closing low, according to Dow Jones Market Data. The stock was also in line to record its largest percentage decrease since January 2022. The stock has fallen 30% in 2023.
Write to Angela Palumbo at [email protected]
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