So Peloton reported earnings this morning and the stock basically fell off a cliff. It opened around 89 bucks a share not too long ago and by midday today it was sitting in the high 50s, which is something like a 35% haircut in a single session. That is not a normal Tuesday. That is a "someone panic-sold their kid's college fund" kind of day.
The headline from the earnings call was that Peloton is walking back its full-year revenue guidance, hard. They'd been telling everyone to expect something in the neighborhood of 5.4 billion for the fiscal year and now they're saying more like 4.4 to 4.8 billion. That's not a rounding error, thats a full admission that the growth story from 2020 isn't repeating itself.
And honestly? I don't know why anyone's shocked. I don't own a Peloton, never have, but my neighbor bought one in April 2020 during the worst of the lockdown boredom and I'd bet actual money its been used maybe four times since June. It's a very nice, very expensive drying rack for her workout clothes at this point. I think that's the story for a lot of these bikes. Everyone bought one because the gym was closed and there was nothing else to do, and now the gym is open again and turns out people would rather go sweat next to strangers and then complain about it than pedal alone in their garage staring at a screen.
That's the thing about pandemic winners that I don't think got said enough back when the stock was riding high near 170 a share last year. A lot of that growth was borrowed from the future. You cant sell someone a $1,495 bike (plus the $39-a-month subscription, dont forget that part) and then expect them to buy another one next year. Once the market's saturated with people who wanted a home gym during lockdown, where's the next wave of buyers supposed to come from? Peloton's answer seems to have been "just keep growing forever," and today the math caught up with them.
There's also a supply chain angle buried in the earnings report that I think matters more than people are giving it credit for. Freight costs are up, shipping delays are up, and Peloton apparently ate a bunch of extra cost just getting bikes to people's doors on time this fall. Combine higher costs with slowing demand and you get exactly the kind of quarter that makes a stock chart look like it fell out of a window.
I'll say one more thing and then I'll drop it: I think the market reaction is a little dramatic even by market standards. A third of the company's value gone in one morning because they said sales might be softer than expected is a pretty extreme response. But that's kind of the deal with any stock that got priced for hypergrowth during a weird 18-month stretch where nobody could go anywhere. When the growth story cracks even a little, everyone runs for the exit at once and the price overcorrects on the way down same as it overcorrected on the way up.
Worth keeping an eye on where this settles by the end of the week, because a drop this size usually either keeps bleeding for a few more days or gets a dead-cat bounce once the initial panic wears off. Either way, if you bought in near the top last year, I'm sorry, that's rough. If you were smart enough (or just too broke) to sit this one out, today's probably not a bad day to feel a little smug about it.
Not related exactly, but I also can't stop thinking about how weird it is that "Facebook" doesn't really exist as a company name anymore as of last week. Going to need a minute to get used to typing "Meta" and having it mean something other than a video game forum abbreviation.