Peloton Stock Plunges as Market Experts Compare it with Netflix CrashMay 22, 2022
Peloton Interactive is a hardware and exercise equipment company operating out of New York. The company specializes in selling equipment that is internet-connected and allows buyers to create a gym-like experience at home. However, citing the loss of demand and new purchase orders, the stock prices of the company experienced a mean thwarting recently.
A recent article published in Wall Street Journal compared the 15% crash of Peloton stocks to a new Netflix series disaster. Per the quarterly report of the fitness equipment manufacturer, Peloton projected revenue of $964.3 million depicted a GAAP loss estimated at $2.77 per stock unit. Meanwhile, the subscription revenue remained at $369.9 million, and affiliated fitness product profits were recorded at $594.4 million.
The Peloton Investors are trying to work out the projections for the performance of the stocks for the upcoming quarter. The investors are estimating that the Connected Fitness subscription revenue has the potential to increase and go from 2.96 million to 2.98 million in the next quarter. According to investment projections, the investors are hoping the subscription revenues to deplete from $964 million to $675 million roughly.
The management of Peloton told the media that the 4th quarter projections from last year are greater in terms of soft demand in comparison to the market projections for the ongoing year. He further added the sales prospect of the company has improved after the strategic equipment price reduction. However, the investors did not seem to agree with the idea, as the company stock below fell below $11.50.
Peloton Management is Looking for Investors Who are Ready to Acquire more Stocks
The Wall Street Journal reported that Peloton Management is looking for new investors who are ready to acquire stocks at a 15 to 20 percent stake in the company. The recent losses indicated by the quarterly report confirm that Peloton is trying to gather more cash to support its operations. Financial experts postulate that Peloton stocks can fall as low as 27% on a year-on-year basis.
The company is struggling to keep its head out of the troubled water, and many believe that it is impossible to stay afloat for a longer period. Due to the impact of recession and macroeconomic factors, luxury products like Peloton are going to remain under pressure for a while. The management of Peloton needs to come up with better solutions than lowering the prices of their products to deal with this debacle.