The once-hot company reported a dismal quarterly financial report Tuesday, with sales tumbling 15% from a year ago. Peloton loses $757 million last quarter.
As people return to gyms, Peloton has been struggling to maintain its electric growth from the early days of the pandemic. Bike and subscription sales have stagnated. The company has too much inventory, and demand is on the decline.
“Turnarounds are hard work,” McCarthy bluntly told investors in a shareholder letter. “It’s intellectually challenging, emotionally draining, physically exhausting, and all consuming. It’s a full-contact sport.”
But the company’s comeback — if there is one to be had — is slower than Wall Street would like. Peloton added just 195,000 new subscribers last quarter, less than half what it was adding a year ago. And the company said it would post sales of about $700 million this quarter, way below what investors had expected.
Peloton’s $757 million loss is “astonishingly bad” and “underlines the enormity of the task of turning the business around,” said Neil Saunders, the managing director of GlobalData, in a note to investors.
“It is reasonable to assume that costs can be cut further, but even with these future savings Peloton would still be, at best, a low-profit company that delivers a poor return,” he added.
Peloton shares slide as much as 15% in early trading. The stock is down about 90% from when it hit its all time high in late 2020.
To stay afloat, McCarthy said Peloton is borrowing $750 million in five-year term debt from JPMorgan and Goldman Sachs, two banks that helped underwrite its IPO.
“I want to thank everyone involved for their hard work in completing this important financing and look forward to reporting on our progress in reshaping Peloton’s business in the quarters ahead,” McCarthy said.