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Stocks of Peloton Interactive (PTON:US, NASDAQ:PTON) witnessed a sharp plunge on Wednesday, May 5, just a day before announcing its quarterly results. The company had extraordinary sales of its fitness products last year due to stay home orders or work from home routines amid the COVID-19 pandemic.
The fitness equipment provider’s stock fell as much as 14.56 per cent on Wednesday after it recalled its treadmills following reports of multiple injuries and a kid’s death on its machine. It withdrew its weeks ago statement, which said there’s “no reason to stop exercising using its equipment” despite multiple accidents on its fitness machines.
The company CEO John Foley apologized for the company’s earlier statement to the U.S. Consumer Product Safety Commission (CPSC) report in April, which cautioned buyers about the risks of Peloton's Tread+ treadmills.
The recall decision will likely hurt its earnings in the short-term or maybe at in the current quarter. But the company has finally taken a major step to manage the damage control to its brand.
Its shareholders will keenly be watching its third fiscal quarter results as the stock has slumped over 45.5 per cent year-to-day (YTD).
Let us delve into this leisure industry’s stock performance and outlook:
Peloton Interactive (PTON:US, NASDAQ:PTON)
The recreational products retailer offers a digital fitness platform that helps in generating more revenues from its online product sales.
The fitness stock yielded over 128 per cent in the past year and surged over two times against the S&P Leisure Products Sub Industry. However, it has shrunk 51.7 per cent from its 52-week high of US$ 171.09 apiece (January 14, 2021) to US$ 82.62 apiece at close on Wednesday.
The stock has witnessed a bear market and dropped 26 per cent below the 200-day simple moving average, as per data available on EODHD/Others.
©Kalkine Group 2021
In the second fiscal quarter of 2021, the company generated US$ 1.065 billion in revenue, up 128 per cent year-over-year (YoY). It reported a total of 1.67 million connected fitness consumers, a 134 per cent YoY surge, propelled by its virtual fitness subscribers who bought workout gears and machines digitally.
The company posted a gross profit of US$ 424.8 million in Q2 FY 21 that accounted for 39.9 per cent of revenue, a rise of 115 per cent YoY.
Pelton’s Outlook For Q3 FY21
The company expects 1.98 million total connected fitness subscribers at the end of the previous quarter. It estimates quarterly revenue of US$ 1.1 billion for Q3 FY21.
