Peloton Interactive (NASDAQ:PTON) slashed its guidance for the current year as first quarter results missed market forecasts.
The downgrade comes after the lifting of pandemic restrictions and the reopening of gyms led to a faster fall than expected in demand for Peloton’s exercise bikes and treadmills.
The company’s performance has also been impacted by supply chain constraints.
Peloton reported a net loss of US$376mln for the quarter, compared with net income of US$69.3mln in the same period of 2020. The loss per share of US$1.25 exceeded analysts’ expectations for a US$1.07 loss.
First-quarter revenue grew 6% to $805.2mln, missing forecasts for $810.7mln.
Connected Fitness subscriptions grew 87% to 2.49mln.
Peloton said, “a softer than anticipated start to Q2 and challenged visibility into our near-term operating performance is leading us to recalibrate our fiscal year outlook”.
It now expects revenue for full year 2022 to be between US$4.4bn-US$4.8bn, down from US$5.4bn previously and below a market consensus of US$5.39bn.
Underlying losses (adjusted EBITDA) are estimated to be US$425mln-US$475mln.
Connected Fitness subscriber numbers are forecast at between 3.35mln- 3.45mln, down from a prior outlook of 3.63mln.
“The primary drivers of our reduced forecast are a more pronounced tapering of demand related to the ongoing opening of the economy,” the company said.
Peloton attempted to mitigate the effects of falling demand in the first quarter by cutting the price of its original Bike by 20%.
“We are pleased with the consumer response to our new price, which quickly converted many consumers already in our purchase funnel and is helping to generate a significant number of new leads,” it said in its earnings release.
But in a conference call with analysts, Peloton chief financial officer Jill Woodworth said the effects of the price cut did not meet initial expectations.
“While the price drop led to conversion rates that exceeded our forecast, overall traffic has not met our initial expectation,” she said.
Shares plummeted 32.47% US$58.10 in pre-market trade.