Quarterly revenue at Peloton Interactive Inc. (NASDAQ: PTON) was so poor that the stock plunged and CEO Barry McCarthy was fired. However, the real description of the company’s problems was in the fine print: “We are mindful of the timing of our debt maturities, which consist of convertible notes and a term loan, and we know this is also on the minds of our shareholders.” Peloton is low on cash, and there is no reason to believe that the problem can be solved, particularly as its business falls apart.
Revenue dropped from $749 million in the year-ago period to $717 million. Peloton posted yet another loss, $167 million compared to a loss of $275 million a year ago. The company had $794 million of cash on its balance sheet. At the current burn rate, that could last as little as a year. It has a convertible loan of $988 million and a term loan of $681 million.
Peloton has tried everything available to turn around its business. It has offered used versions of its products. It has set up a subscription business. And it sells its equipment in such outliers as Dick’s Sporting Goods. (Check out the fastest-growing brands in each state this year.)
The truth of the matter is that Pelton’s expensive exercise equipment sold well during the worst of the pandemic when people could not go to gyms. Once people could return to gyms, the demand for its products fell. And there is no way to regain that customer base.
Peloton’s market cap is down to $1.1 billion, which is too high.
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