Peloton takes $8bn hit to value as it warns over sales headwinds
ALMOST $8bn (£6bn) was wiped off Peloton’s value after it warned over sales as consumers ditch home workouts for outdoor exercise and the gym.
Shares dived by almost a third in early trading yesterday after Peloton cut its full-year sales expectations by up to $1bn.
The fitness company, best known for its exercise bikes and remote classes, said sales are now expected to total between $4.4bn and $4.8bn in the year to June 2022, down from previous forecasts of $5.4bn.
Peloton admitted that it had underestimated the impact of economies reopening around the world after a string of lockdowns.
The company’s £1,750 internetconnected spinning bikes and treadmills were hugely popular among home workers while gyms were closed during the pandemic.
Its bikes allowed locked-down workers to connect to virtual gym classes and personal trainers for a fee of up to £39 per month. Its customers include Rishi Sunak, the Chancellor.
However, its shares have slumped this year as people returned to gyms and outdoor exercise in recent months.
John Foley, the chief executive, told investors that Peloton was suffering from “challenged visibility” and “demand uncertainty amidst reopening economies”.
Revenues grew only 6pc to $805m in the three months to the end of September compared with the previous quarter. The figures are in contrast to a 250pc sales boost it recorded during the first three months of 2020. The company reported a $376m net loss during the third quarter.
As well as exercise bikes, Peloton sells treadmills that start at £2,295 with a subscription of £54. It has slashed the price of its bikes by £400 on its UK website as it attempts to boost interest.
The falling stock price robbed Mr Foley, the firm’s founder, of his billionaire status. His net worth fell to $850m as shares lost as much as 34pc, according to Bloomberg’s billionaire index.
Gym bosses have claimed that memberships have begun to recover after enforced pandemic shut downs ended in-person classes and workouts.
In June, Richard Darwin, the chief executive of Gym Group, said: “Online doesn’t replace the gym.”
Richard Windsor, an independent technology analyst, said: “The powerful narrative of Peloton sweeping the fitness market and putting the gyms out of business with high-margin products has been completely swept away and now only the fundamentals are going to matter.”