Peloton Interactive lowered its full-year revenue forecast amid a two-year restructuring effort, sending the exercise equipment maker’s stock to an all-time low on Thursday.
The stock price fell 24% to a low of $4.17, and closed at $4.21 on Thursday.
The company now expects full-year 2024 sales to be between $2.68 billion and $2.75 billion, a downward revision from its previous forecast of $2.7 billion to $2.8 billion.
“By lowering its guidance, Peloton is acknowledging that it will be difficult to pivot from a hardware-centric business to a subscription-based model,” said Zach Stamber, senior retail and e-commerce analyst at research firm Insider Intelligence. “
The company had 3 million connected fitness subscribers in the second quarter, up about 1% year over year and beating FactSet estimates of 2.99 million.
“Paid connected fitness subscriber numbers have exceeded expectations, but there are many potential speed bumps going forward,” Stamber said.
Peloton, one of the biggest beneficiaries of the COVID-19 lockdown, has entered into partnerships with Amazon and Lululemon Athletica to make its products and services more accessible.
The company is also betting on a boost from the reintroduction of its high-end product, the $5,995 Tread+, two years after it was temporarily discontinued due to safety concerns.
Still, demand for the company’s equipment was lower than expected as customers weary of inflation cut back on spending during the holiday season, the busiest time for hardware sales.
“Paid connected fitness subscriptions were higher than expected, but hardware sales were slightly lower than expected,” Chief Financial Officer Elizabeth Coddington said on a conference call with analysts.
Peloton currently expects to generate positive free cash flow in the fourth quarter, but said it will fall short of achieving positive free cash flow for the full year.
Revenue fell 6.2% to $743.6 million, but beat analysts’ expectations of $733.5 million, according to LSEG data.
The company said it expects third-quarter sales to be between $700 million and $725 million, lower than analysts’ expectations of $753.8 million.
