Amazon bump could be short lived

It’s been a tough week for quite a few big-name stocks. (Here’s looking at you Zoom and AMC.) Unfortunately, the trend continued on Thursday—this time with indoor bike maker Peloton Interactive. The stock is sinking in pre-market trading after the firm reported disappointing Q4 2022 results. Here’s what you need to know:

  • Wait, didn’t Peloton stock surge yesterday? Yes, it did. As a matter of fact, Peloton stock (ticker PTON) was up over 20% yesterday to $13.48 per share on the back of the news it will begin selling its bikes and accessories on Amazon.
  • So what’s happened now? Despite the surge in Peloton’s stock yesterday, at the time of this writing, PTON is down over 16% to $11.25 per share due to reporting a sixth consecutive quarter of losses. This time, Peloton lost $1.2 billion in its fourth quarter.
  • How bad are Peloton’s losses? Pretty bad, and they are widening. As CNBC reports, a year ago during the same quarter Peloton lost $1.05 per share, or about $313 million in total. But the same quarter this year saw Peloton lose $3.68 per share, or about $1.24 billion in total.
  • Why is Peloton suffering such losses? For a number of reasons: pared back consumer spending and rising inflation are just two of them. But the main thing affecting Peloton is the loss of people using its actual services and equipment. Peloton usage surged in the early days of the pandemic when lockdowns were in place. Now, however, why stay inside to ride a connected bike when you can go outdoors and cycle through the real world?
  • What does Peloton say about all this? In a letter to shareholders, Peloton CEO Barry McCarthy said Peloton is like a cargo ship: “In high school, I spent three summer months working on a cargo ship. After midnight on my second voyage, I was asleep when the alarm for general quarters woke me. My reporting station was on the bridge. Fear is a great motivator. I dressed while I ran. The 720 ft ship was doing 27 knots and the helm was hard alee. The ship was healing sharply to starboard and the steel hull was shuddering. The captain was trying to turn the ship around, but a ship that big, going that fast, takes miles and miles to change direction. We saved two mens’ lives that night. They’d been lost at sea, in the Mediterranean, for several days. A fortunate, happy ending. Peloton is like that cargo ship. We’ve sounded the alarm for general quarters. Everyone’s at their station. We continue to add new inputs to evolve our go to market strategy to restore growth. When will the ship respond is the question. Our goal is FY23.”
  • Did Peloton give an outlook for fiscal 2023? Nope.

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