Peloton Overhaul Outlook Tops Estimates
Peloton shares climbed up to 12 percent after the company announced a stronger-than-expected holiday quarter forecast. The firm is repositioning itself as a comprehensive wellness brand, seeking to restore profitability following its first major hardware update in years.
Financial Performance and Forecast
The company projected revenue between $665 million and $685 million for the three months ending in December, surpassing Wall Street’s estimate of approximately $661 million for its fiscal second quarter.
“Our continued momentum on bottom line performance sets the stage for improvements on the top line as we progress through the fiscal year, fuelled by our commitment to innovation and growing the Peloton community,” said Chief Executive Officer Peter Stern.
He added that he is confident in Peloton’s ability to execute its “strategic plan, return Peloton to profitable growth, and extend Peloton’s lead in connected fitness and wellness.”
Product Recall and Market Impact
Earlier on Thursday, Peloton recalled around 877,800 units of its premium Bike+ model in the US and Canada due to reports of broken seat posts that caused riders to fall. The recall incurred a cost of $13.5 million in the first quarter.
Peloton shares closed at $6.71 in New York, marking a 22.9 percent decline from the start of the year through Thursday’s close.
Author’s Summary
Peloton’s upbeat forecast and focus on wellness hint at a turnaround, but the Bike+ recall and share losses continue to weigh on short-term investor confidence.