CNN
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Shares of embattled exercise equipment maker Peloton soar The company reported sales growth for the first time in more than two years on Thursday.
Home fitness company Sales rose 0.2% year over year to $644 million, and the stock price soared more than 35%.
While that may not sound like a huge sales boost, analysts said it could be a sign that turnaround efforts are paying off after years of losses. The company saw sales surge at the start of the pandemic but then begin to decline as people returned to offices and abandoned their new home exercise equipment.
Peloton announced a restructuring plan aimed at cutting costs in May. Lay off 15% of your employees Former CEO Barry McCarthy.
“We’re pleased to announce that we’re seeing strong growth in our revenue and profits,” Chief Financial Officer Liz Coddington told investors during the company’s Thursday briefing. Peloton announced on its earnings call that it was cutting spending on promotions and marketing, signaling a shift in focus from growth to profitability.
Analysts say this game plan is the best course of action for Peloton.
“Peloton has nearly 3 million members who pay $44 a month to ride their machines at home and are making very healthy profits, which is very impressive,” said Simeon Siegel, managing director and senior retail analyst at BMO Capital Markets. “The best thing the company can do is focus on making more money instead of creating noise and chasing new customers.”
The past nine quarters have been a rollercoaster ride for Peloton. The company was one of the pandemic’s biggest stars as lockdowns closed gyms and kept everyone at home. Its shares rose nearly 400% in the 12 months before hitting an all-time high of $167.42 in January 2021. It slipped away from there.
Widespread recalls and business missteps, including selling bikes in school uniform colors and redesigning the free version of its fitness app, have tarnished the company’s image and alienated investors, sending its shares plummeting to an all-time low of $3 earlier this year.
Still, despite the company reporting its first-ever decline in paid subscribers (down to about 2.98 million from more than 3 million last quarter), Siegel said he still sees Peloton having a way to go.
“Peloton’s biggest offense is a very strong and compelling defense. They make so much money from their existing users that they need to protect them, but that means abandoning their focus on acquiring new users,” he said. “If they do, today’s rise will be just the beginning. If they don’t, it will be fake news.”
