The stock's free fall continued this week following Peloton's fiscal first-quarter results, issued on Nov. 4. Even the company's recent announcement that it was expanding its connected fitness product lineup with a new strength offering wasn't enough to buoy the shares.
The reopening of the economy has been a headwind for growth this year, yet Peloton is not having problems keeping existing users engaged. Subscribers are clearly satisfied with their Peloton Bikes, as noted by the 12-month retention rate remaining stable at 92% last quarter. That is a big positive, but management's lower revenue guidance for the full year, on top of a reported net loss of $376 million on the bottom line, was enough to make investors rethink the value underpinning the shares at these levels.
On a positive note, Peloton's release of its first connected fitness product designed specifically for strength workouts is a catalyst to watch. The Peloton Guide is an AI-enabled device that connects to a user's TV and costs $750, just about half of what a Peloton Bike costs. This might help drive some extra sales in the near term.
It's unclear if the company's forward guidance of 14% revenue growth for fiscal 2022 included any sales from the new strength offering, but there could be a lot of pent-up demand for Peloton Guide, since strength has been a growing area of interest for subscribers over the last few years.