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Amazon Bump May Be Short-lived

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It’s been a tough week for quite a few big names. (See Zoom and AMC here.) Unfortunately, the trend continued on Thursday — this time with indoor bike maker Peloton Interactive. The stock falls in pre-market trading after the company reported disappointing fourth quarter 2022 results. Here’s what you need to know:

  • Wait, Didn’t Peloton Shares Rise Yesterday? Yes, I did. In fact, Peloton stock (ticker PTON) was up more than 20% yesterday to $13.48 a share after news that it will be selling its bikes and accessories on Amazon.
  • So what happened now? Despite Peloton’s stock surge yesterday, at the time of writing, PTON is down more than 16% to $11.25 a share as it reported a sixth straight quarter of losses. This time, Peloton lost $1.2 billion in the fourth quarter.
  • How bad are Peloton’s losses? Pretty bad, and they’re getting bigger. as CNBC reports, a year ago during the same quarter, Peloton lost $1.05 a share, or about $313 million in total. But in the same quarter of this year, Peloton lost $3.68 a share, or about $1.24 billion in total.
  • Why does Peloton suffer such losses? For a number of reasons: declining consumer spending and rising inflation are just two of them. But the main thing that affects Peloton is the loss of people using the actual services and equipment. Platoon use rose in the early days of the pandemic when the lockdowns were in place. But why stay indoors to ride a connected bike when you can go outside and cycle through the real world?
  • What does Peloton say about this? In a letter to shareholdersPeloton CEO Barry McCarthy said Peloton is like a freighter: “In high school, I worked on a freighter for three summer months. After midnight on my second trip, I was asleep when the general departure alarm woke me. My hotline was on the bridge. Fear is a great motivator. I got dressed as I ran. The 720 ft ship was doing 27 knots and the rudder was hard ale. The ship healed sharply to starboard and the steel hull shook. The captain tried to turn the ship around, but a ship this big and going so fast takes miles and miles to change direction. We saved two men’s lives that night. They had been lost at sea for days, in the Mediterranean. A happy, happy ending. Platoon is like that freighter. We have raised the alarm for the general department. Everyone is at their station. We continue to add new inputs to develop our go-to-market strategy to restore growth. When will the ship respond is the question. Our target is FY23.”
  • Has Peloton Provided Outlook for Fiscal 2023? No.

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