Peloton, a brand that gained popularity during the pandemic era, witnessed a massive drop in share prices. Here, we explore whether we can expect to see Peloton make money in the future.
What is Peloton?
Peloton easily takes top position as one of the most famous at-home gym equipment companies. However, the company is most commonly known for its original Peloton Bike. During the pandemic when most were forced into exercising from home, the bike rose in popularity. Peloton Bike provides users with a large screen and rear speakers that allow users to select one of the thousand workout classes available via the Peloton All-Access membership.
In addition to this, Peloton offers its users a variety of bike accessories. What’s more, the company also sells other at-home gym equipment, a subscription-based exercise app, and two types of exercise bikes.
Earnings Over the Recent Past
During the peak of the coronavirus pandemic in 2020, Peloton generated a whopping 250% increase in sales during the first quarter of that fiscal year. However, in 2021, the gym equipment company saw a massive drop in sales. According to CNBC, sales for Peloton decreased by a steep 17% to $501 million.
However, contrary to its declining sales, Peloton did see a leap in subscriptions with the company counting 2.49 million fitness subscribers in 2021. This was an increase of 87% in year-over-year data. Furthermore, the company witnessed a growth in subscription revenue by 94% reaching $304.1 million. The company also generated connected fitness sales which amounted to 62% of the business revenue during the quarter of the fiscal year.
When can we Expect to See Peloton Make Money?
Unfortunately for Peloton, the outlook for its future seems bleak. Shares for the gym equipment company fell steeply during the last quarter of the 2021 fiscal year. The shares for Peloton initially fell by a whopping 15% slowing down to a 6% fall.
Additionally, the company suffered a loss per share of $1.05 as opposed to the predicted 50 cents. In total, the net loss generated by Peloton in July 2021 accumulated to $313.2 million in contrast to a net income of only $89.1 million. By the end of 2021, the company accumulated a gross profit margin of 32% as opposed to its predicted 34%.
However, analysts predict that Peloton stocks for 2022 will keep falling. They have a great customer base but with COVID-19 wrapping up as well (fingers crossed), people are less inclined to work out at home and the numbers show it. This ambigious environment ensures the business will stay in hot water for a while longer. Profitability is unfortunately out of the question till then.
