Peloton $PTON Stock Crashes On Rumors of Halting All Bike/tread Output

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PTON stock crashed -17% on January 20, 2022, after rumors circulated that the company was halting all bike/tread output.

Peloton CEO says rumors of halting all bike/tread output false, Bloomberg says

The report also indicates that the company is considering layoffs.

Peloton Interactive, Inc. Reports Preliminary Second Quarter Fiscal 2022 Results

On January 20, 2022, Peloton Interactive, Inc. (Nasdaq: PTON) provided a business update and reported preliminary results for its second quarter Fiscal 2022 ended December 31, 2021.

Peloton forecasts Q2 revenue of $1.14B versus the consensus estimate of $1.15B. Ending Connected Fitness Subscriptions of approximately 2.77M, versus previously provided guidance of 2.8M-2.85M. Average Net Monthly Connected Fitness Churn of 0.79%. Adjusted EBITDA in a range of ($270M)-($260M), versus previously provided guidance of ($350M)-($325M).

  1. Ending Connected Fitness Subscriptions of approximately 2.77 million, versus previously provided guidance of 2.8 million to 2.85 million
  2. Average Net Monthly Connected Fitness Churn of 0.79%
  3. Adjusted EBITDA in a range of $(270) million to $(260) million, versus previously provided guidance of $(350) million to $(325) million

“As we discussed last quarter, we are taking significant corrective actions to improve our profitability outlook and optimize our costs across the company. This includes gross margin improvements, moving to a more variable cost structure, and identifying reductions in our operating expenses as we build a more focused Peloton moving forward. This work is still underway and we expect to have more details to share when we report earnings on February 8, 2022,” said John Foley, co-founder and CEO.

Peloton demand slowdown dashes softer post-COVID landing hopes, says Macquarie

Macquarie analyst Paul Golding keeps his Outperform rating and $85 price target on Peloton but notes that all of his estimates and assumptions are on watch ahead of the company’s Q2 results on February 9th. Golding adds that the absence of concrete timing or demand info on new SKUs in the prior Peloton update could be indicative of a “softer landing” in terms of post-COVID demand, but today’s report signaling waning consumer demand “dashes those hopes”.

Peloton delays opening of Ohio factory by one year, NY Post reports

Peloton is delaying the opening of a $400M factory in Ohio by a year “because the company is stuck with a glut of exercise machines and too little demand,” Theo Wayt and Lisa Fickenscher of New York Post report, citing sources. The factory will now open in 2024 rather than 2023, which is expected to save between $100M and $200M during the fiscal year 2022 to 2023, a source told the Post. In addition, Peloton’s warehouse and delivery centers have had their hours cut to 20 hours per week amid lower demand for exercise equipment, another source told the paper. Source: https://nypost.com/2022/01/20/peloton-delays-opening-of-400-million-us-factory-as-demand-tanks-source/

Peloton halts production amid waning consumer demand, CNBC reports

Peloton Interactive is temporarily halting production of its connected fitness products as consumer demand wanes and the company looks to control costs, Lauren Thomas of CNBC reports, citing internal documents obtained by CNBC. Peloton plans to pause Bike production for two months, from February to March, the documents show. The company already halted production of its Bike+ in December and will do so until June, Thomas adds. Peloton also won’t manufacture its Tread treadmill machine for six weeks, beginning next month, and does not anticipate producing any Tread+ machines in fiscal 2022, according to the documents. Peloton, in a confidential presentation dated January 10, said demand for its connected fitness equipment has faced a “significant reduction” around the world due to shoppers’ price sensitivity and amplified competitor activity, according to Lauren. Shares of Peloton are down 11% to $28.34 following the report. Source: https://www.cnbc.com/2022/01/20/peloton-to-pause-production-of-its-bikes-treadmills-as-demand-wanes.html

📺 Peloton to temporarily halt production of bikes, treadmills: Internal documents

Peloton to temporarily halt production of bikes, treadmills: Internal documents

📉 PTON Stock Technical Analysis

Pton Stock

The short-term trend is negative, as is the long-term trend. PTON is part of the Leisure Products industry. There are 32 other stocks in this industry, of which 85% are performing better than PTON. PTON is currently making a new 52 week low. This is a very bad signal. The S&P500 Index is trading in the upper part of its 52-week range, so PTON is lagging the market.

There is a resistance zone ranging from 33.67 to 34.08. This zone is formed by a combination of multiple trend lines and important moving averages in the daily time frame.

The technical rating of PTON is bad and it also does not present a quality setup at the moment. PTON stock has a Setup Rating of 0 out of 10. Prices have been extended to the downside lately. For a nice entry it is better to wait for a consolidation. Click here to sign up for email alerts on when PTON stock consolidates and has a Setup Rating of 8 or higher.

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