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Workday, Peloton Make Waves After Hours as Markets Sink

By Dan Caplinger – Aug 26, 2021 at 6:46PM

Key Points

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Earnings continue to pour in.

The stock market moved lower on Thursday, with investors looking nervously at the Federal Reserve's symposium in Jackson Hole for guidance about what the central bank will do next with interest rates and its bond-buying program. Ongoing worries about the COVID-19 pandemic also appeared to weigh on markets. The Dow Jones Industrial Average (^DJI -0.90%), S&P 500 (^GSPC -0.73%), and Nasdaq Composite (^IXIC -0.70%) all gave back some ground from their recent gains.

Index

Percentage Change

Point Change

Dow

(0.54%)

(192)

S&P 500

(0.58%)

(26)

Nasdaq

(0.64%)

(96)

Data source: Yahoo! Finance.

It's been a fairly busy week for earnings, and a couple of high-profile companies made some sizable moves in after-hours trading. Peloton Interactive (PTON -8.43%) gave back some ground after its financial report, but Workday (WDAY 0.16%) moved higher. Below, we'll give you the details.

Peloton drops off the back

Shares of Peloton Interactive added to their losses from earlier in the session. A 2% drop in regular trading preceded the 6% decline Peloton posted after the bell.

Peloton continued to see significant growth in some key metrics. Revenue grew 54% to $937 million, with connected-fitness subscriptions growing 114% to 2.33 million and paid digital subscriptions coming in at 874,000, up 176% year over year.

Person holding hand weight and kneeling next to treadmill.

Image source: Peloton Interactive.

However, investors were not pleased to see some negative signs, as well. Churn moved sharply higher to 0.73% from the 0.31% rate it posted three months ago. Although total workout volume grew 75% to 134.3 million, average workouts per subscriber were down from 24.7 a year ago to 19.9 in the most recent quarter. Worst of all, Peloton's net loss of $1.05 per share was far larger than most had anticipated.

Even worse, Peloton implemented price cuts, reducing the price of its landmark Peloton Bike by $400 to $1,495. The company warned that the reduction, along with higher costs, could weigh on profitability in the coming quarters, as well. That move was largely unexpected, especially given that, at least until recently, Peloton was having a lot of trouble filling orders, even at the higher price point.

Investors are adjusting their expectations going forward, but Peloton is clearly focusing on the long run by trying to woo subscribers at all costs. That could pay off, but the connected-fitness specialist has to demonstrate that those customers will be loyal in the face of some recent controversies.

Workday is working

Meanwhile, shares of Workday moved higher by more than 5% in the after-hours session on Thursday. Favorable earnings results gave investors more confidence in the stock, sending the fast-growing cloud HR software provider ever closer to a new record high.

Workday's second-quarter results kept up the company's positive momentum. Revenue rose 19% year over year on a nearly 20% jump in subscription revenue. Adjusted earnings per share of $1.23 climbed 46% from last-year's period.

Workday cited a number of factors helping produce what its co-CEO called one of the strongest in its history. Large enterprise customers have increasingly used Workday's platform as part of their digital-transformation efforts. Improving conditions in the economy also helped push Workday forward.

Accordingly, Workday boosted its guidance for the remainder of the year. The company sees sales rising 19% for the full year, with third-quarter subscription revenue likely to rise 20%.

It's easy to see why investors are pleased with that result. If conditions keep improving, Workday could see even more tailwinds helping propel it even further.

Dan Caplinger owns shares of Peloton Interactive. The Motley Fool owns shares of and recommends Peloton Interactive and Workday. The Motley Fool has a disclosure policy.

Stocks Mentioned

Workday Stock Quote
Workday
WDAY
$169.60 (0.16%) $0.27
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$33,476.46 (-0.90%) $-305.02
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$3,934.38 (-0.73%) $-29.13
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
^IXIC
$11,004.62 (-0.70%) $-77.39
Peloton Interactive Stock Quote
Peloton Interactive
PTON
$11.51 (-8.43%) $-1.06

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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