Peloton shares plunge on bigger-than-expected loss after recall and drop in subscribers

Peloton (PTON) shares fell more than 20% in early trading Wednesday after reporting a bigger-than-expected loss as lower subscriber numbers and recall costs impacted its results.

Points to remember

  • Peloton shares fell more than 20% in early trading on Wednesday after reporting a bigger-than-expected loss.
  • Peloton said seat recall costs were higher than expected and resulted in a loss of subscribers.
  • The fitness equipment company has warned that its cash flow could be negative over the next two quarters.

Peloton reported a net loss of $241.8 million or 68 cents per share for the quarter ended June 30, down from $1.26 billion or $3.72 per share for the same period there. one year old.

The Company Fitness Equipment said it lost 29,000 subscribers in the quarter and the costs of a recall “far exceeded our initial expectations.” an additional $40 million for actual costs incurred during the quarter and future expenses related to the recall.

Peloton said it received approximately 750,000 requests for replacement related to the recall of its seat in May. To date, the company has completed 340,000 and is on track to complete the replacements by September, ahead of schedule, but slower than expected. About 15,000 to 20,000 users affected by the spring recall have suspended their subscriptions.

Peloton warned that this could be negative money flow for the next two quarters, and said it was looking at business and corporate welfare and taking steps to expand its appeal to a broader base of consumers. The company said the introduction of new subscription tiers to the Peloton app has brought a “significantly higher mix of higher priced App” tier members. » ; than expected, and growth in adoption of its free offering.

With Wednesday losses, the Peloton shares have lost almost a third of their value this year.



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