Shares of Peloton Interactive (PTON.US), a fitness equipment company, gained today as the company reported an increase in subscriptions. Although the company failed to make a profit for the eighth consecutive quarter, Peloton's loss was the smallest since Q4 2021. The stock has gained more than 90% since the start of 2023, and there has also been speculation in the market regarding takeover bids for the company by Amazon (AMZN.US) or Nike (NKE.US):
Earnings (loss) per share (EPS): $335.4 million, $0.98 per share vs. $0.64 forecasts (Refinitiv) and $1.39 in Q4 2021
Revenue: $792.7 million vs. $710 million expectations (Refinitiv)
Paid subscriptions: 3.03 million (10% increase vs. Q4 2021)
- CEO Barry McCarthy, a former Spotify and Netflix executive, called the financial results a potential "turning point." For the third quarter in a row, subscription revenue was higher than fitness product sales. The fitness company's revenue in its fiscal second quarter beat Wall Street expectations, although the company reported a larger loss per share than expected;
- Paid subscriptions rose despite a tougher macro environment and weaker consumers hit by inflation and interest rates, potentially indicating the strength of the company's product. Sales of fitness products, which are typically strong in Peloton's holiday quarter, fell 52% y/y while subscription revenue rose 22% signaling a bond between customers and the brand. Revenues were down 30% from the year-ago period, but were above the company's expected range of $700 million to $725 million.
- Peloton expects revenues to be lower in the next quarter, but margins to be higher. The company forecasts sales between $690 million and $715 million and gross margins of about 39%. The company expects the number of fitness subscribers to be between 3.08 million and 3.09 million (up 50,000 to 60,000) in Q1 2023;
- Peloton is losing money on exercise machines but its subscription business once again maintained overall positive margins. Gross margins for its combined fitness products were negative (11.2%)but gross margins for subscription sales were as high as 67.6%. The overall gross margin was 29.7%, up from 24.8% in the year-earlier period. However, it declined from the previous quarter, due in part to increased promotions during the holiday quarter. The number of in-app subscribers was 852,000, down 1% year-on-year; the company's goal for 2023 is to reach 1 million in-app subscriptions.
Peloton Interactive (PTON.US) shares, M15 interval. The price is trying to reverse the uptrend, potentially the first level worth attention in case of a deeper correction is the 23.6 Fibonacci retracement of the upward wave started at the end of December 2022. Source: xStation5
