Peloton Gets Crushed

When fitness product maker Peloton Interactive Inc. (NASDAQ: PTON) released its quarterly earnings, they could not have been worse. Barry McCarthy, the chief executive and president, said the results “will be a function of where you sit.” He should have said, “Will the last one to leave please turn out the lights.”
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Peloton managed to lose $1.2 billion, an amazing feat for what was among Wall Street’s darlings. Management successfully has pounded into the ground. Revenue dropped to $679 million from $937 million. Consumers have lost interest in its overly expensive bikes and treadmills that allow people to watch trainers on a screen. It may be this was popular when people were trapped in their homes during the COVID-19 pandemic. As they returned to their gyms, they left their Pelotons to sit on the junk heap.
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Peloton cut a deal to sell its products on Amazon, and Wall Street cheered. However, success will be based on demand, no matter where the machines are sold. The Amazon deal is not likely to be helpful.
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McCarthy said the company’s cash management situation has improved. That only matters if the cash problem markedly improves. Based on Peloton’s struggles, that is unlikely.
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McCarthy made the point that he worked on a cargo ship when he was in high school. He then drew a comparison between running these ships and running a bike company. McCarthy wrote that two men lost at sea were saved during his time as a sailor. He added “Peloton is like that cargo ship. We’ve sounded the alarm for general quarters. Everyone’s at their station.”

Presumably, everyone was at their station as the Titanic sank. It did not matter.