Peloton loses $1.2 billion in single quarter as hardware sales plunge

Photo Credit: Tony Webster / CC by 2.0

Struggling exercise company Peloton posted a $1.2 billion loss in a single quarter amid falling equipment sales.

The company’s quarterly revenue fell nearly 30% and Peloton lost $2.8 billion in the year ending before June 30. That’s compared to a loss of $189 million over the same period in 2021. Demand for exercise bikes and treadmills has dried up as the world reopens after two years of pandemic shutdowns.

Platoon shares fell more than 18% on the new to close at around $11. When trading resumed on Friday, shares of Peloton continued to fall to $10.46 at the time of writing. Peloton’s overall share price is down 91% from just a year ago.

Despite the company’s bleak outlook, CEO Barry McCarthy tried to offer a different twist. McCarthy didn’t take over from Peloton until February 2022. The company has focused on high-end luxury customers, but McCarthy says Peloton will start offering more to “frugal customers.”

“Opponents will look at our financial performance and see a falling revenue crucible, negative gross margin and higher operating losses,” McCarthy said in his letter to investors. “They will say it threatens the viability of the business. But what I see is meaningful progress that boosts our comeback and Peloton’s long-term resilience.

Peloton spent $412 million in cash this past quarter as part of the company’s restructuring efforts amid declining revenues. The silver lining is that this number is down from the $650 million burn Peloton experienced in the previous two periods. As Americans get back to their pre-pandemic habits (likely returning to the gym), it’s unclear how Peloton plans to pivot. Nobody wants to buy a $2,500 exercise bike that comes with a subscription when you can get the same workouts on your phone for a lot less.

Peloton spent hundreds of millions of dollars to expand the company’s manufacturing capability. In February 2022, Peloton canceled plans to build a $400 million factory in Ohio to manufacture its gear. Peloton’s subscription revenue ($383 million) exceeded its hardware sales ($296 million) for the first time in its history.