2 Reasons Investors Overreacted to Peloton Interactive’s Latest Quarter

The holidays were very kind to Peloton Interactive (NASDAQ: PTON). The maker of high-end exercise bikes saw revenue jump 77% year over year, on top of nearly doubling its connected fitness subscriber total in the quarter compared to last year. 

But investors weren't so kind to the stock. Company shares fell about 15% following the fiscal second-quarter earnings announcement last week. The culprit was a lower-than-expected outlook for the fiscal third quarter, which calls for revenue growth to decelerate to 50% year over year, while subscriber growth is expected to remain robust at 85%.

The outlook for subscriber growth points to continued momentum in the business, so what's the deal with revenue growth? During the call, management outlined two reasons for the soft outlook, which makes the market's knee-jerk reaction look unjustified.

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Source Fool.com