It has a long way to go to recover after the stock rebounded Friday.
The images are by Ezra Shaw.
The ride that Peloton shares are on is getting worse. The stock plunged on Thursday, wiping out billions in market value, after it was reported that the company would temporarily halt production of its bikes and treadmills.
The news was first reported by CNBC and came as Peloton was trying to cut costs.
The CEO of the company denied the report late on Thursday in a letter to employees.
The information the media has obtained is incomplete, out of context, and not reflective of the strategy of the company. The company had a slight increase in revenue from last quarter, which hit $1.1 billion.
On Friday, the shares went up 10% to $27 per share. The stock is down more than 20% this month and is still near its lows.
The stock crashed back down to Earth.
Ycharts.
Peloton saw huge demand from customers who were stuck at home in 2020, with shares going up 440%. It was not easy to match that banner year, as the company's stock fell over 70% in 2021. The company has had to slash prices for its exercise bikes and other products due to slowing demand.
Things got worse in November when shares plunged after the company reported lackluster earnings. The company slashed its sales forecasts.
The net worth of the CEO plunged with the stock. The first time he appeared on the Forbes billionaires list, he had a net worth of 1.5 billion.
According to Forbes, the chief lost his billionaire status in November as his net worth fell to around $900 million. His fortune is now $400 million, after his stock fell in recent months.
The company went public with an $8 billion valuation. The company didn't start out as profitable, but the demand for vaccine in April 2020 helped it grow. As demand slowed, the losses took hold.
With the company having underestimated post-pandemic demand for its at- home fitness products, it is struggling to get rid of a large inventory of bikes and treadmills.
The market valuation of Peloton has taken a huge hit. The company had a market cap of $50 billion in January 2021.
It is almost back to its IPO valuation.
Ycharts.
The company's CEO, and former billionaire, remains undeterred: "We are taking significant corrective actions to improve our profitability outlook and maximize our costs across the company." The improvements include gross margin improvements, moving to a more variable cost structure, and identifying reductions in operating expenses as we build a more focused Peloton.
According to a note Friday from Scott Devitt, an analyst from Stifel, the company's future is still bright. The closing price of the stock was below pre-pandemic levels in February 2020. The stock should be valued more because of the larger subscriber base and subscriber additions which are out of line with prior levels, according to Devitt.
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