Peloton founder and CEO John Foley is no longer a billionaire after the company’s stock plunged on a reduced revenue forecast.
Shares of Peloton were down 35 percent in afternoon trading on Friday, at $56.17, a day after the company slashed its annual revenue projection by as much as $1 billion.
Foley, who saw his wealth soar to more than $1.5 billion as pandemic restrictions boosted a frenzy for home fitness, saw his wealth plunge to just $850 billion as the company’s stock tanked, according to Bloomberg.
Once the darling stock of lockdown, Peloton’s expensive exercise bikes and treadmills have seen their appeal decline as gyms and fitness classes reopen — a reversal in fortune that some analysts are heralding as a sign of the pandemic’s true ending.
Peloton founder and CEO John Foley is no longer a billionaire after the company’s stock plunged on a reduced revenue forecast
Shares of Peloton were down more than 35 percent in afternoon trading on Friday
‘It is clear that we underestimated the reopening impact on our company and the overall industry,’ Chief Financial Officer Jill Woodworth said on a post-earnings call Thursday.
The company was also battered by negative headlines after recalling their treadmill earlier this year due to the death of a child pulled under its belt, and the injuries of 29 others.
Peloton now expects annual sales between $4.4 billion and $4.8 billion, compared with $5.4 billion previously. Its holiday-quarter sales forecast also missed market expectations.
After rising more than 400 percent during the height of the pandemic in 2020, Peloton’s stock is now down more than 60 percent so far in 2021.
‘People are no longer trapped at home and competition is growing,’ BMO Capital Markets analyst Simeon Siegel said.
After rising more than 400 percent during the height of the pandemic in 2020, Peloton’s stock is now down more than 60 percent so far in 2021
Rising vaccinations and easing curbs have encouraged people to go back to gyms this year, hitting Peloton’s growth and boosting the earnings of chains like Planet Fitness.
Speaking on CNBC on Thursday, Planet Fitness CEO Chris Rondeau said that gym membership numbers had nearly returned to their pre-pandemic peaks.
‘Our height was 15.5 [million members]. We’re 97 percent all the way recaptured back to where we were pre-Covid,’ Rondeau said.
Peloton has tried to cushion the blow by cutting the price of its popular bike by $400 and ramping up its ad spending. But its sales rose just 6.2 percent in the three months to September 30, the slowest pace since in more than a year.
Sales and marketing expenses more than doubled to account for 35.3 percent of total revenue in the first quarter and were expected to remain high in the crucial holiday period.
Peloton recalled its $4,000 treadmills earlier this year. Tread, a less expensive version of its original treadmill, is set to debut in the United States, Canada and the UK next week for $2,495
Digital subscriptions do not require Peloton equipment and were up 176 per cent to more than 874,000. The company attributed the boom to free trials.
Yet the pace of growth slowed in the third quarter, partly due to the temporary halt of treadmills.
Peloton has also grappled with global chip crunch, supply disruptions and rising freight costs that have piled on the expenses.
That in part plunged it to a net loss of $376 million, from a profit of $69.3 million a year earlier.
‘Given the unprecedented circumstances presented by the global pandemic, we said last quarter that modelling the exit from COVID and the massive growth we saw in fiscal 2021 would be a challenging task, and that has certainly proven to be true,’ chief executive John Foley told investors on a conference call.
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