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Peloton Interactive Inc. has been spinning its wheels in recent quarters trying to turn its business around, and investors will be looking for signs of progress Wednesday morning.
The maker of connected exercise equipment is due to post results before the opening bell that will show whether the one-time pandemic darling has been able to reignite demand even as consumers move to do more outside their homes. The results will also demonstrate whether or not Peloton’s
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cost-cutting efforts can help stem losses meaningfully.
Peloton is expected to post a steep GAAP loss of $244 million for its December quarter, though that would be significantly below the $409 million loss it recorded in the September period and the whopping $1.2 billion loss it generated in the June quarter. All eyes will be on the outlook as well to see how Peloton expects to progress from this point.
Here’s what to watch for in the upcoming fiscal second-quarter report.
What to expect
Earnings: Analysts tracked by FactSet expect Peloton to log a GAAP loss per share of 66 cents, compared with $1.39 a year prior. Analysts also anticipate a loss of $108 million on the basis of adjusted earnings before interest, taxes, depreciation, and amortization (Ebitda), whereas Peloton lost $267 million on the metric a year earlier.
Revenue: The FactSet consensus calls for $710 million in December-quarter revenue, down from $1.13 billion a year earlier. According to Estimize, which crowdsources projections from hedge funds, academics, and others, the average estimate is for for $711 million in revenue.
Stock movement: Peloton shares have fallen after four of the company’s last six earnings reports, though they ended up sharply higher after Peloton’s most recent report. The stock has lost more than half its value over the past 12 months, but it’s ahead upwards of 60% to start 2023.
Of the 30 analysts tracked by FactSet who cover Peloton’s stock, 13 have buy ratings, 15 have hold ratings, and two have sell ratings, with an average price target of $12.56.
What else to watch for
Truist Securities analyst Youssef Squali said that expectations for Peloton are “muted,” but he expects the company’s numbers to come in “virtually in-line” with those projections.
“We should see green shoots emerging with progress being made on stabilizing CF [cash flow] and liquidity, on supply chain issues, on LTV [lifetime value] and on new model/product initiatives,” he wrote. “That said, much work remains to reposition the company for profitable growth, which we don’t expect until FY24.”
Evercore ISI analyst Shweta Khajuria said that Peloton has made “moves in the right direction” with initiatives like an Amazon.com Inc.
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partnership and a “good, better, best” alignment of its equipment. But she also thinks that the turnaround is a long-run project.
“[I]t will take some time before we see an inflection point in top-line growth,” she wrote.
In the upcoming report, she’ll be watching the company’s outlook, noting that there’s “downside risk” to the March-quarter forecast “given the challenging macro environment.”
Baird analyst Jonathan Komp also had some concerns about the outlook, citing his “more cautious view of the environment (including signs of accelerated return to gyms)” in a recent downgrade of Peloton’s stock.
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