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Highlights:
- Investors responded negatively to reports claiming that Peloton was halting the production of its bike for two months.
- The market is already facing resistance from investors due to fears that the Federal Reserve will hike interest rates.
- In the first quarter of the fiscal year 2022, Peloton said its connected fitness subscriptions grew 87 per cent year-over-year (YoY).
Stocks of Peloton Interactive Inc. (NASDAQ:PTON) declined as much as 25 per cent on Thursday, January 20. At the end of the trading session, PTON stock closed 23.9 per cent lower at US$ 24.22 per share.
Notably, it was for the first time when shares of Peloton crashed below its 2019 initial public offering (IPO) price of US$ 29 per share.
The decline came after published reports claimed that its bike and treadmill production was temporarily halted due to slow demand.
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Investors responded negatively to reports claiming that Peloton was halting the production of its bike for two months, i.e., in February and March.
The market is already facing resistance from investors because the Federal Reserve will hike interest rates.
5 things to know as Peloton falls below IPO price
1. Interestingly, soon after the decline in share prices, Peloton issued a statement on its website dismissing claims that it plans to stop the production of its exercise machines.
2. In a statement, Peloton's chief executive officer (CEO) John Foley wrote that the information the media has obtained was incomplete, out of context and not reflective of the company's strategy.
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3. Mr Foley stated that the company had worked diligently to meet the demand at a time when the world needed Peloton.
4. Peloton said that its churn rate was 0.79 per cent, which means that the members are staying with the company. The statement added that recently Peloton achieved the highest ever a number of daily workouts- more than 2.9 million.
5. During pre-market hours Peloton stock was up about seven per cent to US$ 25.91 per share at the time of writing. Investors could be less sceptical after the CEO's statement.
Bottom line
In the first quarter of the fiscal year 2022, Peloton said its connected fitness subscriptions grew 87 per cent year-over-year (YoY) to 2.49 million and paid digital subscriptions grew 74 per cent YoY to 887,000.
The total revenue grew six per cent YoY to US$ 805.2 million. Meanwhile, the net loss was US$ 376 million in Q1 2022.
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