What Happened?
Shares of exercise equipment company Peloton (NASDAQ: PTON) fell 23.2% in the morning session after the company reported disappointing fourth-quarter results and provided a weak outlook for the upcoming quarter and full year.
For the quarter, revenue fell 2.6% year-over-year to $656.5 million, missing Wall Street's expectations. The company also posted a GAAP loss of $0.09 per share, which was wider than the $0.06 loss analysts had anticipated. Looking ahead, Peloton's guidance for the next quarter's revenue of $615 million came in below consensus. The company also lowered its revenue forecast for the full year, signaling ongoing challenges in stimulating demand. The combination of missing current-quarter estimates and lowering future expectations overshadowed a beat on adjusted EBITDA, painting a challenging picture for the fitness company.
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What Is The Market Telling Us
Peloton’s shares are extremely volatile and have had 60 moves greater than 5% over the last year. But moves this big are rare even for Peloton and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 12 months ago when the stock gained 17.9% on the news that the company reported strong fourth-quarter results, with EBITDA significantly surpassing Wall Street estimates and guidance for the next quarter coming in well above expectations. Gross margins improved significantly, with Connected Fitness Products gross margin reaching 12.9%, due to a shift toward higher-margin products and lower costs. This margin expansion helped drive the earnings outperformance despite revenue pressures. Overall, this quarter showed that profitability is strong and that the turnaround is in progress.
Peloton is down 25.4% since the beginning of the year, and at $4.57 per share, it is trading 55% below its 52-week high of $10.15 from February 2025. Investors who bought $1,000 worth of Peloton’s shares 5 years ago would now be looking at an investment worth $30.78.
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