Peloton shares collapse as demand hit by slump in home workouts

PELOTON shares slumped to a record low yesterday after it said more customers were cancelling subscriptions and its exercise bikes were piling up in warehouses.

The fitness bike maker, which enjoyed a spike in demand during the pandemic as cyclists and gym-goers were stuck at home, recorded a $757m (£614m) quarterly loss. It said revenues had slumped by 24pc in a year, the first time it had posted a quarterly loss since going public in 2019.

Shares fell by 15pc after the results, valuing Peloton, which has been seen as a takeover target by Amazon or Nike, at around $4bn (£3.4bn) compared to more than $50bn 18 months ago.

Peloton makes connected fitness bikes and treadmills that stream live classes, and has enjoyed endorsements from the likes of Rishi Sunak, the Chancellor, and Joe Biden, the US president.

However, it has lost more than 90pc of its market value since the height of Covid lockdowns in late 2020 as it fails to keep up with gyms reopening.

Its founder John Foley stepped down this year under pressure from activist investors, who said he had mismanaged the company during the pandemic by assuming the boom in home fitness would continue.

Barry Mccarthy, a former Spotify and Netflix executive who replaced Foley in February, said the company was suffering from “excess inventory”.

The company said it expected total subscribers, who pay £39 a month after purchasing a bike or treadmill, to climb by just 20,000 in the current quarter, as existing customers cancel subscriptions because of an impending US price rise.

Peloton has recently cut the price of its bikes and raised the monthly subscription in an attempt to encourage more buyers. It has also cut thousands of jobs to try and stop bleeding cash.

This week the company borrowed another $750m to fund its turnaround efforts. “Turnarounds are hard work. It’s intellectually challenging, emotionally draining, physically exhausting, and all consuming,” Mr Mccarthy wrote in a letter to shareholders.

He said he wanted to make the company less reliant on sales of its hardware by boosting its digital app, which charges £12.99 a month for classes. He said he planned to grow total subscribers from 3m today to 100m.

Activist investor Blackwells Capital has urged Peloton to sell itself to Disney, Nike or Apple but it has resisted.