Peloton sheds $8 billion in value after earnings show the reopening is hitting sales hard

• Peloton stock plunged as much as 34%, its biggest one-day drop ever, after its fiscal first-quarter earnings.
• It is struggling as the economy reopens and more people return to gyms and buy competitor products.

Peloton shed as much as $8 billion in market value on Friday after weak quarterly earnings showed the company is struggling with the reopening of the economy.

The stock fell as much as 34% in its biggest one-day drop ever, taking its market capitalization down to around $18 billion, compared with around $26 billion on Thursday.

Peloton was last trading 32.1% lower at $58.29 a share. The stock price peaked above $170 in January.

The exercise equipment company disappointed investors with its first-quarter fiscal earnings on Thursday, reporting a net loss of $376 million or $1.25 a share, compared with a profit of $0.24 per share a year earlier. Analysts had been expecting a loss of $1.07 per share, according to Refinitiv.

The company also revealed a gloomy outlook for the full fiscal year, slashing its forecasts for subscribers and sales. Peloton now expects revenue to range between $4.4 billion and $4.8 billion, compared with an earlier prediction of $5.4 billion.

Peloton flourished in the pandemic, as millions of people in lockdown around the world turned to its products and services to help them stay fit at home. Sales soared 250% in the first quarter of 2020.

But the company is struggling now the global economy is reopening, as people have the option to return to gyms and competitors launch similar, cheaper products. Its stock has fallen more than 62% so far in 2021.

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"It is clear that we underestimated the reopening impact on our company and the overall industry," Peloton boss John Foley said in a call with shareholders.

James Hardiman, an analyst at Wedbush, said: "The fall from grace for Peloton in such a short period of time is fairly astonishing."

Peloton slashed the price of its bike in August by 20% to $1,495, but the approach bore little fruit in the fiscal first-quarter. Sales of connected fitness products fell 17% year-on-year to $501 million despite a big jump in marketing expenses.

Foley said: "While the price drop led to conversion rates that exceeded our forecast, overall traffic has not met our initial expectations."