Peloton Interactive (PTON) - Get Free Report cut its forecast for annual revenue by up to $1 billion Thursday, saying it sees lighter-than-expected holiday sales because of the economic reopening which has led to people spending more time out of their homes and off their exercise bikes.
The company, a Wall Street darling during the height of the COVID-19 pandemic, forecast full fiscal year 2022 revenue of $4.4 billion to $4.8 billion. It said it sees fiscal second quarter sales of $1.1 billion to $1.2 billion. Wall Street analysts were looking for $1.5 billion in the quarter.
Peloton shares fell sharply after the report. The stock fell $22.72, or 26%, to $63.34 in after-hours trading.
Just three months ago, the company had forecasted full-year revenue of $5.4 billion in its quarterly letter to shareholders.
“The primary drivers of our reduced forecast are a more pronounced tapering of demand related to the ongoing opening of the economy,” the company said in a statement.
Peloton, which cut prices on its exercise bikes by $400 earlier this fall, said its Connected Fitness gross margin will fall year over year. The decline “will be driven primarily by the price reduction of our original Bike, a richer mix of original Bike sales, deleveraging of fixed costs in our supply chain, and higher than anticipated variable costs including commodities and freight.”
Less than a year ago the stock traded as high as $171.09 as homebound fitness fans snapped up the company’s pricey exercise bikes in a bid to stay healthy.
In addition to the reduced forecast, Peloton reported a wider-than-expected loss for its fiscal first quarter on lighter-than-expected revenue. The company said it lost $1.25 a share on revenue of $805.3 million. Analysts surveyed by FactSet were expecting the company to lose $1.10 a share on sales of $809 million.