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Peloton Shares Ride High On Debut Profit As Pandemic Fuels Bike Sales Surge

Peloton posted its first-ever quarterly profit as a public company as fitness gear sales more than tripled from customers working from home in the wake of the coronavirus pandemic.

Peloton Interactive Inc.  (PTON) - Get Peloton Interactive, Inc. Class A Report shares surged higher Friday after the connected fitness group posted its first ever quarterly profit as sales of its eponymous exercise bike surged in the wake of the global coronavirus pandemic.

Peloton said total revenues for the three months ending in June, the group's fiscal fourth quarter, rose 172% from last year to $607.1 million, paced by a tripling of fitness equipment sales, which totaled $485.9 million. The group's bottom line of $89.1 million, or 27 cents per share, also topped Street forecasts and was its first-ever profitable quarter since going public in October of last year.

Looking into its 2021 fiscal year, Peloton said the launch of new fitness products, such as the Bike+ and the Tread+, will help lift overall sales to a range of between $3.5 billion and $3.65 billion, well ahead of the Refinitiv forecast of $2.7 billion.

"The strong tailwind we experienced in March as the COVID-19 pandemic took hold has continued to propel demand for our products into the fourth quarter and first couple of months of Q1 fiscal year 2021," founder and CEO John Foley told investors on a conference call late Thursday. "Organic demand for our bike remains strong, and member engagement remains elevated despite improving weather and the gradual reopening of the brick and mortar fitness locations."

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"With the unexpected continuation of these elevated sales trends, our teams have continued to grow our manufacturing base and expedited shipments of products where possible, while scaling delivery and number of support teams," he added.

Peloton shares were marked 6.6% higher in early trading Friday to change hands at $94.12 each, a move that extends the stock's year-to-date again to around 230% and value the New York based fitness group at around $26.4 billion.

"The rollout of a lower-priced Tread and reduction in the original bike pricing continues to improve the consumer value proposition," said KeyBanc Capital Markets analyst Edward Yruma. "Moreover, our field work points to high receptivity of existing Bike users to upgrade to the Bike+, which is a vector of growth (device upgrades) that we had not previously contemplated."

"The new Tread offers both a lower cost and more compact footprint, which should help materially enhance its market opportunity," he added. "Finally, we also believe that multiple CF device households should help lower already-industry-low churn rates."