Peloton sinks after issuing downbeat outlook as it slashes $400 off the price of its original exercise bike

• Peloton shares dropped 10% early Friday following a shortfall in fourth-quarter financial results and a federal subpoena for documents.
• Peloton said it was subpoenaed by the DOJ and Homeland Security related to reports of injuries from its products.
• The company cut the price of its entry-level bike by $400, a move that will hurt its short-term profitability.

Peloton dropped sharply Friday after the high-end exercise equipment maker announced a price cut for its original bike, a move it said will hurt its bottom line in the short run, and said it was subpoenaed by federal officials about injuries related to its products.

Shares dropped as much as 10% to $102.21 in premarket trading then pared the decline to 4%. The shares this year have slumped by roughly 25%.

The company in a Friday filing with the Securities and Exchange Commission said it has received a subpoena for documents from the Department of Justice and the Department of Homeland Security about injury reports it had received. Peloton in May issued a recall of its Tread+ treadmills following the death of one child and 70 incidents.

The company on Thursday reduced the price of its entry-level bike by $400 to $1,495, the second price cut in a year. Peloton said the reduction will make it more affordable to purchase but it will impact its near-term profitability.

Peloton expects a fiscal year 2022 adjusted loss of $349 million and to return to adjusted profitability in fiscal year 2023.

For the first quarter of fiscal year 2022, it foresees sales of $800 million. Analysts polled by Refinitiv had projected $1.01 billion.

Results for fiscal fourth-quarter 2021 ended June 30 fell short of expectations. Peloton posted an adjusted loss of $1.05 a share on 54% revenue growth to $936.9 million. Analysts had expected, on average, an adjusted loss of $0.45 a share on revenue of $927.2 million.