Peloton stock soars as earnings smash estimates

Yahoo Finance's Emily McCormick joins The First Trade with Alexis Christoforous and Brian Sozzi to discuss Peloton’s second-quarter earnings report.

Video Transcript

ALEXIS CHRISTOFOROUS: The seesaw ride continues for investors. After another big selloff yesterday, we've got stock futures in rally mode this morning. Taking a look, Dow futures up 100 points now. We've got NASDAQ futures rallying nearly 60, and S&P futures up about 17 points.

Those recently high-flying tech names, including Apple, Amazon, and Tesla all fell this week. And the tech-heavy NASDAQ is on track for its biggest weekly loss since the market crisis of mid-March. Still, the NASDAQ is up 22% for the year. And some think the recent decline is the start of a protracted pullback. But others call it a healthy correction, after prices shot up too far too fast.

And Goldman Sachs this morning making a bullish call on stocks, the firm raising its global equity allocations to overweight for the next three months. Yahoo Finance's Emily McCormick is with us now for more. Good morning, Emily. So what's driving this positive momentum this morning?

EMILY MCCORMICK: Well, good morning, Alexis. Well, as you mentioned, really seeing a seesaw market the past couple of days. We had, of course, the NASDAQ down as much as nearly 5% in one of its larger swings over the past week now. Of course, we did have that 11% drawdown that we saw in that tech-heavy index heading into the beginning of this week. We saw that actually turn positive then.

We've really been rotating between gains and losses here, trying to find footing in those tech shares. Right now, seeing stock futures pointing higher here, trying to regain some of those losses that we had yesterday. If we think about yesterday's trading session, quite a choppy day. We did have stocks open low-- higher and then actually to swing to losses of more than 1% on all the major indices.

So quite a bit of volatility here. As you mentioned, analysts still trying to make sense of where the market may be heading next. They had been expecting some sort of tech correction after this huge run up that we saw, especially in late summer and in August. And that's really what we've been seeing over the past weeks worth of trading.

ALEXIS CHRISTOFOROUS: I want to highlight one company in particular that's on the move this morning, Emily, and that is Peloton. The company absolutely crushed it with their latest earnings report. I guess people just can't get enough of this-- of this company and their exercise bikes during the pandemic.

EMILY MCCORMICK: Absolutely, Alexis. We had those fourth quarter results blow away expectations, particularly on the top line. We saw the fiscal fourth quarter revenue up 171% year-over-year to $607 million. That came as the company's connected fitness subscribers also more than doubled over last year to 1.09 million. That was ahead of expectations.

And the company does expect to end its 2021 fiscal year with as many as 2.1 million connected subscribers. So really seeing a ton of demand here for the company's indoor, at-home fitness equipment during the pandemic. Investors and customers also have new products to look forward to. We had Peloton earlier this week unveiling a new higher end bike and cheaper treadmill, and also announcing it's cutting the price of its flagship bike by a couple hundred dollars to try and lure in even more demand.

Now, I also want to highlight what we had CFO Jill Woodworth saying on the call yesterday. She mentioned that the company expected demand to moderate in its fiscal fourth quarter that it just reported heading into the summer months, but that it saw an unexpected increase because of those COVID-19 cases in the south and west and that resurgence there. So that's something that has been weighing on the company's ability to move through its backlog and to keep up with demand.

She said that the company expects to return to normalized order to delivery windows in the US around the second quarter of fiscal '21. And we do see shares of Peloton sharply higher in early trading, up over 10% to nearly $98 a share. Alexis?

ALEXIS CHRISTOFOROUS: Nice day for Peloton investors. And Brian, I know you were on that earnings call last night. There's also a piece you wrote about Peloton on our site. Now they're getting into the business of used bikes. Tell us about that.

BRIAN SOZZI: Yeah, Alexis, analysts asked Peloton founder John Foley, well, if you're going have all these members, thousands of members trading in their old bike for a new bike, what do you do with all the bikes? So they did tease that they're going to launch a CPO program. What does that mean? Certified preowned ownership.

Why should Craigslist and eBay get all the fun? Look for that marketplace, I suspect, to launch within the next 12 months. But I will ask Peloton founder John Foley about that. I'm talking to him after the show. And we'll have more on that on Monday morning.

ALEXIS CHRISTOFOROUS: Great, looking forward to that.