Peloton falls 22% after earnings reveal plunging subscribers and steep cost of bike seat recall

• Peloton stock cratered on Wednesday after the fitness equipment company reported major subscriber losses.
• Peloton lost 29,000 subscribers over the past quarter and burned through an extra $40 million dealing with a bike seat recall.

Peloton stock plummeted on Wednesday shortly after the company reported its earnings for its fourth fiscal quarter, revealing major subscriber losses and huge costs associated with addressing an unexpected bike seat defect that resulted in a recall.

Shares of the stock plunged 22% to trade at $5.40 on Wednesday. The stock is down around 33% since January.

The cult-favorite exercise equipment maker said its revenue fell to $642.1 million over the last quarter – slightly above the expected $641.6 million, but down 5.4% from last year's figures.

Meanwhile, it said it expected to pull $580 million-$600 million in revenue over the next quarter, below the expected guidance of $647.8 million.

That's partly due to a wave of members who are choosing to pause or cancel their subscriptions. Subscribers dropped by 29,000 over the last quarter, the firm said.

Meanwhile, Peloton has had to pay millions to deal with a defect in the seat post of its exercise bike, leading to 750,000 subscribers to request a replacement, more than had been expected. In total, the recall cost the company an extra $40 million, the firm said, or 6% of its quarterly revenue.

"Peloton's FYQ4 performance is a reminder we operate a seasonal business," Peloton CEO Barry McCarthy said in a letter to shareholders on Wednesday, chalking up the recent slowdown to consumers shifting their focus away from goods spending over the past quarter.

The latest move continues a two-year slide for Peloton stock, with the company struggling to replicate the huge success it enjoyed during the early days of pandemic when people were locked out of gyms and looked to the company for at-home fitness solutions. Shares are down 78% from the all-time-high of $162.72 notched in late 2020.