What happened
Shares of Peloton Interactive (PTON 5.42%) were finally showing signs of life on Wednesday, trading 4.4% higher as of 11:39 a.m. ET. That came after several days of dramatic declines that followed the release of a worse-than-expected earnings report for its fiscal 2022 third quarter, which ended March 31.
The connected fitness equipment maker's stock is down by about 23% over the past week, so shareholders will be thankful for any good news to grab hold of.
Image source: Getty Images.
So what
Revenue plummeted by 24% year over year in its fiscal Q3, finally giving up the ghost in terms of the mid-single-digit percentage growth it had been posting after years when investors became accustomed to triple-digit percentage gains on the top line. Its loss of $757 million, or $2.21 per share, was not only worse than the year-ago loss of $0.03 per share, but well underperformed analysts' rosy consensus expectation for an $0.83 per share loss.
Although the number of connected fitness subscribers at Peloton was still growing, because it has raised monthly subscription rates to $44 from $39 effective in June, it believes it could see a falloff as some subscribers may balk at paying the elevated rate.
Now what
The market for exercising indoors at home is returning to its pre-pandemic trends. Many people just prefer to go to gyms, training centers, and even the great outdoors when it's time to work up a sweat.
Peloton's stock, though, seems to be responding to analysts' new views. Many firms are maintaining a neutral rating on the stock. Analysts at Goldman Sachs, Truist, and MKM Partners have not cut their ratings for the stock, though they, and those at several other institutions -- including Bank of America and Deutsche Bank -- have cut their price targets for it. BMO Capital is one that rates Peloton Interactive at underperform.
