Peloton shares dip premarket following disappointing holiday quarter forecast

Investing.com -- Shares in Peloton (NASDAQ:PTON) slumped in premarket U.S. trading on Thursday after the fitness company delivered a disappointing forecast for holiday trading.

The group famous for its digitally-enhanced exercise equipment said it now expects to post revenue in its fiscal second quarter of $715 million to $750 million, below Bloomberg consensus estimates of $769.8M. Peloton is also seen falling to an adjusted loss before interest, taxes, depreciation and amortization of between $70M to $90M, wider than projections for a loss of $46.8M.

Chief Executive Barry McCarthy told shareholders in a letter that the company is now "making a large bet" on increasing the number of subscribers on its Peloton app during the 2024 financial year. McCarthy has vowed to return Peloton to growth by focusing on generating revenue through subscriptions instead of hardware.

McCarthy noted that "more than one million" consumers had downloaded the free version of Peloton's app, adding that a strategy aimed at giving the brand a more inclusive reputation is "continuing to resonate."

However, he flagged that "we were less successful at engaging and retaining free users and converting them to paying memberships than we expected."

In the three months ended on September 30, the New York-based firm reported a loss of $159.3 million, translating to $0.44 per share. It marked the eleventh consecutive quarter loss for the company, although it was an improvement compared to a loss of $408.5M, or $1.20 a share, in the corresponding period last year.

Revenue in Peloton's first quarter slipped by 3.4% year-on-year to $595.5M, but still topped expectations of $590.7M thanks in part to better-than-projected sales of its connected fitness offerings.