Peloton Reported Bigger than Expected Third-Quarter Losses
May 10, 2022 By MarketDepth
Peloton (NASDAQ: PTON) reported a bigger-than-expected third-quarter loss on Tuesday as inventory gathered dust within its warehouses and affected its cash. Furthermore, the company revealed a weak sales outlook for its fourth quarter amid declining demand.
Monstrous Earnings Loss
The exercise equipment and media company reported an earnings loss of USD2.27 a share, compared to the expected loss of USD0.83 a share. Revenue amounted to USD964.3 Million, lower than analysts anticipated USD972.9 Million.
“Turnarounds are hard work. It’s intellectually challenging, emotionally draining, physically exhausting, and all consuming. It’s a full contact sport.”CEO Barry McCarthy at the top of the shareholder letter on his first Peloton earnings day
According to Peloton, the decline was mostly due to the massive reduction in consumer demand following the peak of the Covid-19 pandemic. Nevertheless, the decline was balanced out by an increase in treadmill sales, it said.
“We finished the quarter with $879 million in unrestricted cash and cash equivalents, which leaves us thinly capitalized for a business of our scale. Earlier this week we took steps to strengthen our balance sheet by signing a binding commitment letter with JP Morgan and Goldman Sachs to borrow $750 million in 5-year term debt.”CEO Barry McCarthy
Peloton shares have fallen over 60% throughout the year and have a current market cap of USD4.03 Billion.