Once a pandemic darling, Peloton shares tumble with demand

Peloton Interactive Inc reported a bigger third-quarter net loss on Tuesday as expenses doubled and demand for its fitness equipment cratered from pandemic highs, leading to warn the company was “thinly” capitalized.

The company’s shares were down nearly 14 per cent at $12.27 as of 10:23 a.m. ET Tuesday.

“The balance sheet challenge has been managing inventory,” Chief Executive Officer Barry McCarthy said in a letter to shareholders.

“We finished the quarter with US$879 million in unrestricted cash and cash equivalents, which leaves us thinly capitalized for a business of our scale.”

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Peloton to cut jobs, replace CEO as pandemic fortunes fade

The company said it had signed an agreement with JP Morgan and Goldman Sachs to borrow $750 million in 5-year term debt.

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Like many stay-at-home winners, the fitness equipment maker is grappling with plummeting demand.

The company’s market value has tumbled to US$4.69 billion from nearly US$50 billion during the pandemic when its bikes and on-demand fitness content were lapped up.

The company said connected fitness subscribers for the fourth quarter will be about 2.98 million, compared to FactSet estimates of 3.01 million.

Click to play video: 'Peloton indoor cycling proving to be a popular pandemic activity'

Peloton indoor cycling proving to be a popular pandemic activity

Peloton indoor cycling proving to be a popular pandemic activity – Nov 26, 2020

Revenue fell to $964.3 million in the third quarter from $1.26 billion a year earlier.

Peloton, in February, replaced its chief executive officer and has unveiled measures like price cuts for its equipment while focusing on its subscription plans to transform the company.

Net loss attributable to Class A and Class B shareholders widened to $757.1 million, or $2.27 per share, in the quarter ended March 31, from $8.6 million, or 3 cents per share, a year earlier.

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(Reporting by Kannaki Deka and Nathan Gomes in Bengaluru; Editing by Arun Koyyur and Sriraj Kalluvila)