🚣How fast can they Row?

Microsoft responds to FTC suit.

Hey Global Investor! Here’s what you need to know before the US markets open.

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Peloton: Work in Progress

The long-rumoured rowing machine from Peloton (PTON) was just unveiled, and the first deliveries are scheduled for the end of this year. The renowned manufacturer of connected fitness equipment has been struggling with its financials, but new CEO Barry McCarthy is working to bring the company around.

New strategy

The business is looking for strategies to boost sales after experiencing a more than 20% decline in revenue in the latest quarter. Sales of connected fitness equipment like the Bike and Tread and associated accessories bring in product revenue for the company. Additionally, Peloton makes money from the selling of connected exercise subscriptions.

McCarthy has significantly changed the company’s overall approach. The most obvious cost-cutting measures taken by Peloton this year are the elimination of the majority of manufacturing and the termination of a sizable portion of their personnel. But there seems to be a lot more to Peloton’s new approach.

Co-founder and former CEO John Foley, Hisao Kushi co-founder and Chief Legal Officer, and Dara Treseder, the head of marketing for Peloton, departed their board chair positions in September. Foley had resigned from his position as CEO in February, and McCarthy took over in his place.

In addition to cost-cutting, Peloton appears to have implemented other tactics, including new pricing models, a new content structure and a new digital app strategy. One of McCarthy’s most recent initiatives was Peloton’s choice to sell bikes and shoes through Dick’s Sporting Goods and Amazon.com. Additionally, the business extended its national bike rental programme and started certifying previously owned bicycles. Additionally, the company will install bikes in the fitness centres of about 5,400 hotels countrywide as part of a deal with Hilton.

How did they perform?

Peloton reported a larger loss than anticipated and a faster revenue fall than analysts had predicted. Compared to the same period last year, revenue decreased by 23%. Although Peloton expects its Christmas quarter revenue to be between $700 million and $725 million, this is still much less than analysts’ projections of $874 million.

Subscription revenue climbed to $412.3 million in the first quarter from $304.1 million the previous year. In the meantime, linked fitness product revenue fell from $501 million to $204.2 million. Peloton’s gross margin of 35.2% was significantly better than the previous quarter’s minus 4.4% and broadly in line with forecasts.

The total number of Peloton members was 6.7 million, up from 6.3 million last year but down from 6.9 million the previous quarter. McCarthy stated that the business aspires to have 100 million customers at some point.

McCarthy said the company’s turnaround is “a work in progress” in the last earnings call. The decline in demand from the Covid pandemic era, when lockdowns sparked an increase in at-home exercising, has caused the company problems. The business has expanded beyond its direct-to-consumer roots into partnerships with other merchants and a subscription-focused business model.

The company’s shares have lost 90% of their value over the past 12 months. Will the company’s new strategy be its saving grace? We will find out in the subsequent company earnings.

Market Reaction
PTON ended at $9.21, down 6.78%.

Company Snapshot 📈

PTON $9.21, -0.67 (-6.78%).

Analyst Ratings (31 Analysts) BUY 45% HOLD 48% SELL 06%

Newsworthy 📰

Rebuttal: Microsoft Responds to FTC Suit Over Activision Deal (MSFT-2.55%)
Resistance: Survey shows a Costco membership fee hike would face little resistance — we think so, too (COST -0.73%%)
Plunges: AMC plunges after theater company announces capital raise, proposes reverse stock split (AMC -7.36%%)

Later Today 🕒

Piedmont Lithium Inc. Earnings (PLL)
Iris Acquisition Corp Earnings (IRAA)
Azure Power Global Limited Earnings (AZRE)
Nicholas Financial Inc. Earnings (NICK)
Nova Vision Acquisition Corp. Earnings (NOVV)
Singularity Future Technology Ltd. Earnings (SGLY)

Today’s Fun Fact

The human body has over 650 named skeletal muscles.

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