Peloton reduced the price of its bikes, but it didn't work. Michael Loccisano/Getty Images
After its fiscal first quarter earnings, Peloton stock plunged up to 33% in premarket trading
As the economy recovers, more people go to the gym and purchase competitor products, it is in trouble.
The loss of the exercise equipment company led to its reduction in sales and forecasted losses.
Peloton plunged as high as 33% on Friday in pre-market trading after it reported a larger-than-expected loss. The company also reduced its earnings outlook for its quarterly earnings. This was due to the impact of the reopening.
Pre-market, the stock traded at $57.98 per share, down 32.6% The stock closed Thursday at $86.03 per shares.
Peloton disappointed investors by its first quarter fiscal earnings. The company reported a net loss (or $1.25 per share) of $376million, or $1.25 per share. This compares to $0.24 per share one year ago. According to Refinitiv, analysts had expected a loss in the first quarter of fiscal 2011, or $1.07 per share.
Peloton, an exercise equipment manufacturer, also disclosed a grim outlook and slashed its sales forecasts. Peloton expects that revenue will range from $4.4 billion to $4.8 billion. This is a sharp contrast to the $5.4 billion forecast.
Peloton thrived during the pandemic. Millions of people locked down around the globe turned to Peloton to keep them fit. In the first quarter 2020, sales soared by 250%.
The company is in trouble now that the global economy has reopened and people have the option of returning to their gyms or competing for similar products at a lower price, the company is still struggling. In 2021, its stock price has dropped more than 43%.
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John Foley, Peloton's boss, stated that it was clear that they underestimated the impact of the reopening on the company and the industry.
Peloton cut the price of its bicycle in August by 20% to $1495. However, the approach proved ineffective in the first quarter. Despite a significant increase in marketing costs, sales of connected fitness products dropped 17% to $501 millions year-on-year.
Foley stated that although conversion rates exceeded our expectations due to the price drop, overall traffic is not up to our initial expectations.
Wedbush analysts said that the company still has a lot to do in order to increase awareness about its treadmill product in the time frame for Christmas sales.