Peloton stock fell drastically on Wednesday after the company reported its Q4 earnings, revealing significant subscriber losses and massive costs associated with an unexpected bike seat recall.
Exercise equipment company Peloton reported its earnings for its fourth fiscal quarter this week, leading to a sharp plunge in shares of its stock after it revealed significant subscriber losses and massive costs associated with an unexpected bike seat defect requiring a recall. Shares of Peloton stock dropped 22% on Wednesday, down 33% since January.
The subscriber losses are primarily the result of members pausing or canceling their subscriptions while awaiting replacement parts from the bike seat recall necessitated by a defect in the bike’s seat posts. Around 750,000 subscribers have requested replacements, far more than Peloton anticipated, costing the company an extra $40 million (6% of its quarterly revenue.)
As a result, Peloton says its revenue fell to $642.1 million over the previous quarter, slightly above the expected figure of $641.6 million and down 5.4% from last year’s figures. The company expects to bring in between $580 million and $600 million in revenue over the next quarter, below the initially projected $647.8 million.
“Peloton’s FYQ4 performance is a reminder we operate a seasonal business,” said CEO Barry McCarthy in a letter to shareholders, attributing losses to consumers focusing on less spending this past quarter.
Despite the shift in consumer enthusiasm for Peloton after the company’s phenomenal success during the pandemic when people couldn’t go to the gym, Peloton has also announced the return of its All For One fitness festival. Now in its third year, the “annual celebration of movement, music, and community” takes place from September 7-9.
This year, the event’s on-demand classes feature songs from artists including Machine Gun Kelly, Thirty Seconds to Mars, The Black Keys, Dave Matthews Band, Gorillaz, ZZ Top, the Eagles, and more. All for One’s live Artist Series classes will include music from Katy Perry, Skrillex, Hozier, and Chaka Khan.