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May 8, 2023 : Shares of Peloton plunged by 13% on Thursday after the company announced a larger-than-expected loss for Q3 of 2021 and its first-ever predicted decline in subscribers due to an uncertain economic backdrop. Although subscriptions have become a bigger share of Peloton’s business, accounting for 60% of total revenue in the quarter, its hardware sales continue to lag. The company has responded with lower-priced, pre-owned bikes and a rent-to-buy program for fitness equipment. Despite this, Peloton has had to cut costs, lay off employees, shutter stores and outsource its last-mile delivery and manufacturing. It has also had to diversify to drive growth and attract new customers. Peloton ended Q3 2021 with around 3.1 million connected fitness subscriptions, up 5% from the year-ago period. However, the company anticipates a seasonal decline in subscriber growth in Q4, which coincides with warmer weather and summer vacations. It expects to end Q4 with 3.08 million to 3.09 million subscribers, marking the first time the company has guided for a decline in subscribers. In the shareholder letter, CEO Barry McCarthy said the quarter “will be among our most challenging from a growth perspective.” The company also forecast a drop in Q4 revenue of about 6% YoY to between $630 million and $650 million. However, McCarthy urged investors to focus on the long term and noted the company would relaunch the brand and introduce a new version of the Peloton app with a tiered membership structure this month. Separately, Peloton announced on Thursday that it had reached an agreement with Dish Technologies over a patent dispute and will pay Dish $75 million to settle a US International Trade Commission complaint.
