Peloton Interactive Inc. has been spinning its wheels over the past few quarters trying to turn the tide, and investors will be looking for signs of progress Wednesday morning.
The connected exercise equipment maker is expected to release results before the opening bell that will show whether the former pandemic darling has been able to reignite demand even as consumers shift to do more outside the home. The results will also demonstrate whether the Peloton PTON,
cost-cutting efforts can help contain losses significantly.
Peloton is expected to post a strong GAAP loss of $244 million for the December quarter, although that would be significantly less than the $409 million loss it posted for the September period and the whopping $1.2 billion loss it generated in the September quarter. June. All eyes will also be on the outlook to see how Peloton expects to progress from this point.
Here’s what to look out for in the upcoming second-quarter fiscal report.
What to expect
Earnings: Analysts tracked by FactSet expect Peloton to post a GAAP loss per share of 66 cents, compared to $1.39 a year earlier. Analysts also expect a loss of $108 million based on adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), while Peloton lost $267 million on the metric a year earlier.
Sales: The FactSet consensus projects revenue of $710 million in the December quarter, down from $1.13 billion a year earlier. According to Estimate, which crowdsources projections from hedge funds, academics and others, the average estimate is $711 million in revenue.
Inventory movement: Peloton’s shares have fallen after four of the company’s last six earnings reports, though it finished sharply higher after Peloton’s most recent report. The stock has lost more than half its value in the past 12 months, but is leading by 60% as we enter 2023.
Of the 30 FactSet-tracked analysts covering Peloton’s stock, 13 have buy ratings, 15 have hold ratings, and two have sell ratings, with an average price target of $12.56.
What else to look for
Truist Securities analyst Youssef Squali said expectations for Peloton are “muted,” but he expects the company’s numbers to be “virtually in line” with those projections.
“We should see green shoots emerge with the progress made in stabilizing CF [cash flow] and liquidity, on supply chain issues, on LTV [lifetime value] and on new model/product initiatives,” he wrote. “That said, much work remains to reposition the business for profitable growth, which we don’t expect until FY24.”
Evercore ISI analyst Shweta Khajuria said Peloton has made “moves in the right direction” with ventures such as Amazon.com Inc. AMZN,
partnerships and a “good, better, better” alignment of its equipment. But he also thinks the turnaround is a long-term project.
“[I]It will be some time before we see an inflection point in topline growth,” he wrote.
In the upcoming report, he will look at the company’s outlook, noting that there is “downside risk” to the March quarter forecast “given the challenging macro environment.”
Baird analyst Jonathan Komp also had some concern about the outlook, citing his “more cautious view of the environment (including signs of an accelerated return to gyms)” in a recent downgrade of Peloton’s stock.