What happened
Shares of Peloton Interactive (PTON 2.53%) plunged 32% in September, according to data provided by S&P Global Market Intelligence. Two founders announced that they're leaving the company, and the market didn't take the news very well.
So what
This was the next phase of Peloton's woes. The connected fitness company was a pandemic darling, but sales have plummeted and losses have mounted in the aftermath of extreme pandemic growth.
NASDAQ: PTON
Key Data Points
Back in February, the company said that founder and CEO John Foley would be "transitioning" to chairman of the board, with former Netflix executive Barry McCarthy taking over as CEO and president. With new management in place, Peloton launched a new strategy to lower costs and drive growth. That led to a round of changes in the executive team, and speculation that Peloton could be acquired by Amazon or another large company.
In the meantime, sales continue to slide. They were down 28% year over year in the 2022 fiscal fourth quarter (ended June 30), and net loss widened by nearly 300% to $757 million. In some positive developments, members increased 15% over last year, and connected fitness subscriptions were up 27%. In the letter to shareholders, McCarthy noted "renegotiated supply contracts, and significantly reduced cash outflow." Those are the types of measures that are important elements of a rebound, but they don't sound exciting to investors, and aren't enough in and of themselves to incite renewed confidence just yet.
This was all topped off with the announcement in September of the resignations of Foley, along with co-founder Hisao Kushi, chief legal officer.
Now what
Peloton is working feverishly to turn itself around. It recently announced a string of partnerships to get more Peloton devices into more people's hands. One is a deal with United Healthcare for certain members to become eligible for a 12-month subscription to Peloton's app. That was followed by a deal with Dick's Sporting Goods, the largest sporting goods retailer in the U.S., to sell Peloton machines and certain accessories. This week Peloton announced a new partnership with Hilton Worldwide Holdings to supply at least one connected fitness machine in nearly every one of Hilton's 5,400 U.S. hotels, and the market reacted positively to the news. These will drive a spurt in Peloton's sales, but the company needs a lot more than that to get back to positive growth.
Peloton stock is down 76% this year. There's a lot of uncertainty here, and right now, it doesn't look like an opportunity to buy on the dip, but rather a stock to stay away from.
