Peloton Earnings Miss Wall Street Expectations Amid Increasing Subscriber Churn

• Peloton reported a loss of $0.09 per share on revenue of $656 million, missing Wall Street estimates of a loss of $0.05 per share on revenue of $676 million, according to Stocktwits data.
• The connected fitness company stated that it experienced a subscriber churn of 1.9% in Q2, up from 1.6% in the first quarter, and from 1.4% during the same period a year ago.
• Peloton reported 5.8 million members in Q2, down from 5.9 million in Q1, and from 6.2 million during the same period a year ago.

Peloton Interactive Inc. (PTON) on Thursday reported worse-than-expected second-quarter (Q2) earnings on Thursday, with the company reporting a decline in members as well as an increase in subscriber churn during the quarter.

Peloton reported a loss of $0.09 per share on revenue of $656 million, missing Wall Street estimates of a loss of $0.05 per share on revenue of $676 million, according to Stocktwits data. 

Peloton shares were down 9% in Thursday’s pre-market trade. Retail sentiment on Stocktwits around the company trended in the ‘neutral’ territory, while message volumes were at ‘high’ levels at the time of writing.

Subscriber Churn Rises

Peloton stated that it experienced a subscriber churn of 1.9% in Q2, up from 1.6% in the first quarter (Q1), and from 1.4% during the same period a year ago.

The connected fitness company had 5.8 million members in Q2, down from 5.9 million in Q1, and from 6.2 million during the same period a year ago.

Paid app subscriptions also fell during the quarter, down to 0.52 million, compared to 0.54 million in Q1 and 0.59 million during the year-ago period.

The company forecast revenue in the range of $605 million and $625 million in the third quarter (Q3), a decline of 1% year-on-year at the midpoint.

On a positive note, the company raised its full-year adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance to between $450 million and $500 million, up from a previous forecast of between $425 million and $475 million.

What Are Stocktwits Users Thinking?

The opinions of retail users on Stocktwits were divided, with some expressing optimism about the company’s upcoming earnings, while others posted a bearish outlook.

One user stated that while they are bullish on PTON, the company needs to improve revenue and stop losing members.

However, a bearish user pointed out that there is a lot of competition in this space and that there are new health clubs everywhere.

Here’s What Wall Street Has To Say

According to TheFly, analysts at BofA trimmed their price target for the PTON stock last week to $9 from $11, while keeping a ‘Buy’ rating.

BofA stated in its note that it is optimistic about Peloton’s product-led strategy, AI integration, and expanding ecosystem. However, the firm stated that it expects the price increases in October to result in a higher subscriber churn, which is why it has lowered its price target.

Peloton’s Reported Layoffs

According to a Bloomberg report last week, Peloton has laid off 11% of its workforce in its latest bid to cut costs.

The layoffs impact the company’s engineers working on technology and efforts for enterprise customers, the report said, citing people familiar with the matter.

PTON stock is down 4% year-to-date and 19% over the past 12 months.

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