Was Peloton Just a Pandemic Fad?
Peloton Interactive (NASDAQ: PTON) stock got torched Friday after the company slashed its guidance, and growth nearly ground to a halt with revenue rising just 6% to $805.2 million. Hardware sales crumbled as the pandemic boom, which had driven the stock to great heights, faded.
It seemed predictable that sales of the pricey bikes and treadmills Peloton sells with attached digital subscriptions would eventually peak, but the company didn't anticipate that happening so soon. Just as consumers are returning to their pre-pandemic routines, Peloton ramped up spending. Sales and marketing expenses jumped by 148% to $284.3 million as the company spent heavily on advertising the price reduction in its bike along with a new, lower-priced treadmill. Expenses also rose sharply in categories targeting long-term growth like research and development as well as headcount.
While the reopening led to a slowdown in overall growth, the subscription side of the business remained strong. Connected fitness subscriptions continued to grow, adding 161,000 in the quarter to bring the total to 2.49 million. And churn wasn't a problem -- the company reported a 12-month retention rate of 92%, meaning it only lost 8 out of every 100 subscribers over the past year.
Source Fool.com
