There’s more pain than gain for Peloton Interactive (NASDAQ:PTON) Inc in the wake of reports that is pausing – or in its words ‘right sizing’ – production of its high-tech exercise machines.
The Nasdaq share looks set for a 5% bounce, to $25.60, ahead of Friday’s after giving up around 24% on yesterday’s close.
Splitting hairs amidst reports that the company had stalled production operations chief executive John Foley told Peloton staff that the company was evolving to more seasonal demand curves and ‘resetting production levels for sustainable growth’.
The company is said to be axing costs and cutting headcount as demand for the big-ticket exercise bikes and treadmills appears to be softening post lockdowns as gyms reopen.
“We are taking significant corrective actions to improve our profitability outlook and optimize our costs across the company,” Foley said.
“This includes gross margin improvements, moving to a more variable cost structure, and identifying reductions in our operating expenses as we build a more focused Peloton moving.”
Preliminary second quarter results revealed US$1.14n of total revenue, in range of the company’s guidance for US$1.1bn to US$1.2bn. Subscriptions fell short, slightly, of guidance at 2.77mln versus 2.8 to 2.85mln.
Peloton flagged an earnings (adjusted EBITDA) loss between US$260mln and US$270mln, against guidance for US$325mln to US$350mln.