What happened

The stock market broadly got off to a strong start Wednesday, with all three major indices in positive territory as of 10:30 a.m. ET. However, fitness technology company Peloton (PTON 4.29%) was a major underperformer, with shares plunging by more than 20% to a new all-time low.

So what

As you might expect, that slump was due to the company's fiscal 2023 fourth-quarter earnings report, which it delivered before the opening bell. While Peloton beat expectations on the top line with $642 million in revenue, it posted a much larger quarterly loss than investors were looking for. While its $241.8 million net loss was certainly better than the $1.26 billion Peloton lost in the same fiscal quarter a year ago, this is still clearly not sustainable.

In addition, Peloton reported a sequential decline in subscribers. As of June 30, the end of the fiscal quarter, it had 29,000 fewer connected fitness subscribers than it had three months earlier. The recall of its bike seat post was somewhat responsible for the earnings miss, and its subscriber count of 3.08 million was 4% higher than it was a year earlier. Plus, the period under consideration is seasonally weak for most fitness companies, but Peloton's slowdown was worse than expected.

Now what

There were a few positive things to note. For one thing, CEO Barry McCarthy said that while the slowdown exceeded management's expectations, "eight weeks ago the trend reversed itself, and we began to see a reacceleration in hardware sales."

Plus, Peloton has recently rolled out some growth initiatives that could start to have impacts in the current quarter and beyond. These include its May launch of new membership pricing tiers, the announcement of its Peloton for Business initiative earlier this month, and a new program to partner with universities to create co-branded Peloton bikes.

The bottom line is that the fiscal fourth quarter was expected to be ugly, and the numbers were even uglier than expected. But with many new growth initiatives underway and roughly $814 million in cash and cash equivalents on its balance sheet, Peloton could still potentially pull off its hoped-for turnaround.