Peloton (PTON) Rallies On Strong Revenue

PTON Peloton

Peloton Interactive (PTON) rallies Wednesday after the second quarter financial results of fiscal 2023. The revenue came stronger than expectations, but the loss per share disappointed investors. Here are the key points:

Peloton Revenue dropped 30% from the previous year same period, at $792.7 million topping the expectations of $710 million.

The Loss per share was reported at $0.98 cents worse than the expectations of $0.64. That was the eighth quarter in a row with a loss.

The hardware revenue came at $381 million, much higher than the $204 million in the previous quarter.

Operating loss was $335.4M for the quarter vs the loss last year of $439M. The Gross margin was 29.7%.

Adjusted EBITDA was -$122M for the quarter vs. -$267M a year ago.

The total number of members in the quarter fell 1% Y/Y to 6.7 million.

Peloton CEO McCarthy said an epic comeback is underway as losses shrank in 4Q, calling it a turning point as they generated more sales from subscriptions vs connected fitness products for Q3. The CEO also said that headcount reductions are over.

Peloton Outlook

The company now sees third-quarter FY23 revenue of $690 million to $715 million, against the consensus of $692.14 million. Peloton expects third-quarter gross margin of 39% and Q3 ending connected fitness subscriptions between 3.08 million to 3.09 million.

Peloton Stock

As of writing Peloton stock is 20.57% higher at $15.59 on strong volume, boosted by the earnings report and short covering; the short interest was almost 15%.

PTON today hit the highest level since May 2022. The stock entered bullish territory in late January when the price breached above the 200-day moving average. The strong move today has also moved the price to an extremely overbought level as indicated by the RSI index which currently trades at 75.17 ringing a warning bell.

The stock has a 52-week trading range between $6.66 and $40.35. The market capitalization stands at $4.4 billion.

On January 11, Morgan Stanley maintains Peloton Iat Equal-Weight and cut the price target from $5 to $4.5. Goldman Sachs on November 4, kept Peloton Interactive at Neutral and cut the price target from $18 to $12.

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