Amazon bump could be short-lived
September 28, 2022
It’s been a tough week for several high-profile stocks. (Here’s Zoom and AMC.) Unfortunately, the trend continued on Thursday, this time with indoor bike maker Peloton Interactive. The stock tumbles in premarket trading after the company reported disappointing fourth quarter 2022 results. Here’s what you need to know:
- Wait, didn’t Peloton’s stock go up yesterday? Yes, he did. In fact, Peloton stock (ticker PTON) rose more than 20% yesterday to $13.48 per share following the announcement that it will start selling its bikes and accessories on Amazon.
- So what happened now? Despite Peloton shares surging yesterday, at the time of this writing, PTON is down more than 16% to $11.25 per share due to reporting a sixth straight quarter of losses. This time, Peloton lost $1.2 billion in the fourth quarter.
- How serious are Platoon’s losses? Bad enough, and they widen. Like CNBC reports, a year ago in the same quarter, Peloton lost $1.05 per share, or about $313 million in total. But in the same quarter this year, Peloton lost $3.68 per share, or about $1.24 billion in total.
- Why does Peloton suffer such losses? For several reasons: reduced consumer spending and rising inflation are just two of them. But the main thing affecting Peloton is the loss of people using its actual services and equipment. The use of the platoon surged at the start of the pandemic when lockdowns were in place. Now, though, why stay indoors to cycle connected when you can go outside and cycle in the real world?
- What does Peloton say about all this? In a letter to shareholders, Peloton CEO Barry McCarthy said that Peloton is like a freighter: “In high school, I spent three summer months working on a freighter. After midnight on my second trip, I was sleeping when the headquarters alarm woke me up. My reporting station was on deck. Fear is a great motivator. I got dressed while I was running. The 720ft vessel was making 27 knots and the helm was tough. The ship was suddenly healing to starboard and the steel hull was shaking. The captain was trying to turn around, but a ship this big, going this fast, takes miles and miles to change direction. We saved the lives of two men that night. They had been lost at sea, in the Mediterranean, for several days. A happy, happy ending. Peloton is like this freighter. We sounded the alarm for headquarters. Everyone is at their station. We continue to add new inputs to evolve our go-to-market strategy to restore growth. When the ship will respond is the question. Our target is FY23.
- Did Peloton give any outlook for the 2023 financial year? No.