Peloton stock dives after brutal Q4 earnings
Yahoo Finance anchors discuss Peloton earnings and the company's leadership.
Video Transcript
- Hello once again. We're still a few minutes away from the opening bell on Wall Street. So let's check on some of the hottest or not so hottest tickers on the Yahoo Finance trending ticker page. The uphill ride for Peloton just got a whole lot steeper, as they came out with a brutal fourth quarter earnings report this morning. The company lost $1.2 billion in the quarter. It lost members and saw workouts on the platform flat out tank. And this was, well, like we said in the intro, not a good quarter.
And Barry McCarthy really-- I think trying to change-- the new CEO of Peloton trying to change the narrative around the company, saying on the shareholder letter, quote, "When you look at our financial performance in Q4, I suspect what you will see will be a function of where you sit. The naysayers will look at our Q4 financial performance and see a melting pot of declining revenue, negative gross margin, and deeper operating losses."
Well, yeah! I mean, that's what it was.
- Wait. So what is he saying other people will say?
- Yes, I mean it's unclear. I guess he's trying to like reset this initiative and this narrative around the company. But he's working to cut costs right now. This is disturbing quarter. I mean, there's no other way slicing it. I mean, it's just bad.
- I was laughing while you were reading that intro because I was hearing one of the Peloton instructors like voices in my head, like as your trying to climb the hill, you can do it, you can-- it's like, well, I don't know.
- Push!
[LAUGHTER]
- And he's saying depending upon where you sit. I mean, the problem is they're not more people sitting on some of the Peloton connected devices right now.
- Losses!
- You only saw-- you saw 4,000 net connected fitness subscription additions. 4,000 in this most recent quarter. That is a 98% drop off that we saw. You saw a drop off in all of the key categories that they would typically use as well to market even more of those purchases. You saw a 20% reduction in the total platform workouts, 20% reduction in the number of connected fitness quarterly workouts as well. And the average monthly workouts per connected fitness subscription also down 21% in this quarter.
- And guys, can we talk for a minute about how the shares were up 20% yesterday after they signed that deal with Amazon to sell their stuff on Amazon, right? So 20% up yesterday, with somehow magic perception that this was going to turn things around for the company. And then the plunge that we're seeing this morning in the wake of earnings.
I mean, and this is something we talked about yesterday, that-- why would you release that news right before you're releasing the earnings news? I mean, it wasn't going to be a home run.
- And the other problem is now-- look, this fiscal year is now ended for Peloton. That's what they reported today. Over the past two years they've lost $1.5 billion on a net basis. They-- in terms of operations, they blew through over $2 billion in cash on an operating basis. They have 1.2 billion on the balance sheet in cash.
Bottom line, will they have to raise cash over the next 12 months? And I don't think that has been removed from the table, judging by these results in some of the guidance and the forward looking commentary they put out here.
- Yes, they will have to raise cash. Because if they want to continue to put out-- and I guess this is the caveat. If they want to continue to produce-- and production had already come into question earlier this year. If they want to continue to produce the same amount of connected fitness devices and bring that in to market, yes, they will need to raise cash in order to actually make sure that their operations can continue to run.
- This was never going to be anything other than a niche product. It just wasn't. It just wasn't. It costs too much, and there just aren't enough people who do this type of exercise out there to support a long run rapid growth rate for a company like this.
- Well, I do get your point, Julie. And then we have the opening bell on Wall Street. I do think it was disingenuous to put out that Amazon release before an earnings report, because it signaled to a lot of folks that may not be really familiar with the Peloton story, come on in, things are getting better. But they're not. And this quarter clearly put that on display.
- I don't know who wouldn't be familiar with the Peloton story at this point. I don't know. All right. Yes, indeed, there we have the opening bell. I was so excited to keep talking about Peloton that I skated right through. And we--
- You rode right back.
- I did. Oh.
- You pedal past it.
- I did.
[LAUGHS]
We've got-- we've got stocks that are mixed here to open up here this morning. The baby rally that we saw in the Dow futures went away. But we still got it intact for the S&P and the NASDAQ. And we were--
