Topline
Shares of at-home fitness equipment maker Peloton plunged over 30% on Friday after reporting dismal quarterly earnings—making CEO John Foley no longer a billionaire—as the company became the latest pandemic favorite to see its business take a hit from a reopening of the economy.
Peloton became the latest pandemic favorite to see its stock plunge amid a wider reopening of the … [+]
Key Facts
Peloton’s stock was down nearly 34%, to around $57 per share, by midday Friday—its lowest point since June 2020.
Shares of the company, which sells bikes and treadmills paired with monthly subscriptions for at-home workouts, have plunged since reporting lackluster earnings on Thursday afternoon.
Peloton’s earnings and revenue both missed expectations, but what really spooked investors was the fact that the company slashed its sales forecast for the upcoming year by as much as $1 billion.
While Peloton saw incredible growth a year ago during the height of the pandemic—with a 250% sales surge in the first quarter of 2020, the company’s recent earnings show a marked slowdown with momentum fading amid the wider reopening of the economy.
Peloton in particular has felt the impact of more consumers heading back to gyms in person, as evidenced by competitor Planet Fitness’ recent announcement that membership levels were almost back to a prepandemic high.
After rising more than 400% during the height of the pandemic in 2020, Peloton’s stock is now down over 60% so far in 2021.
Big Number: $456 Million
That’s how much Foley’s net worth fell on Friday, bringing his overall net worth to less than $1 billion, according to Forbes’ estimates. Foley first appeared on the Forbes Billionaires list in April 2021 with a net worth of $1.5 billion, but that fortune has since declined as shares of Peloton have struggled this year.
Crucial Quote:
“It is clear we underestimated the reopening impact on our company and the overall industry,” Peloton’s chief financial officer, Jill Woodworth, said in a statement.
Key Background:
Peloton is the latest pandemic winner to see its business struggle as the economy continues to reopen. Other pandemic favorites like smart TV company Roku and online education company Chegg, for instance, also disappointed investors with earnings this week and saw shares fall. Reopening stocks, meanwhile, have done better recently: Uber reported its first-ever adjusted profit as demand for ride-sharing recovered, while Airbnb had its “strongest quarter ever,” as travel continues to rebound.
What To Watch:
Several Wall Street analysts downgraded Peloton stock after the disappointing earnings report. “Demand is coming in lower on all fronts leading us to wonder when we might see a return on all the capital they have deployed,” analysts at Credit Suisse said in a note. “Long term, the connected fitness opportunity could still be intact but the path to get there appears more difficult.”
Further Reading:
Chegg Stock Plunges 48% As Revenue Takes A Hit From Schools Reopening (Forbes)
