Short Sellers Smell Blood as Peloton’s “Fix Everything” AI Glow-Up Falls Flat (-20%)

“I am never going to financially recover from this…” -morons who convinced themselves that BTFD in January was a genius move

The covid sensation workout bike became a short-seller's dream today (-20%) after Peloton’s earnings all but revealed they can’t even get soccer moms excited about getting fit during New Years resolution season.

You know. The one quarter where demand is basically supposed to be on autopilot. Instead, Peloton managed to fumble the ball at the goalline (you hate to see it).

(Source: Peloton)

Revenue missed. Losses came back. Subscriptions slid to their lowest level in years. And all of this happened after Peloton rolled out its big, glossy product refresh… the AI tracking cameras, the swivel screens, the hands-free controls, the “this will totally fix everything” upgrades. Spoiler Alert: they in fact, did NOT fix a single thing.

Turns out consumers saw all that and said, “Cool tech. Still not paying more.”

Holiday-quarter revenue clocked in at $657 million, below expectations. Loss per share came in worse than hoped. Sales fell year-over-year again (mind you, the sixth straight quarter of decline) during the exact moment Peloton historically relies on guilt and new credit card limits to carry the business.

Hardware revenue missed. Subscription revenue missed. Both sides of the house underperformed, which is impressive in a deeply unfun way. And yes, all this happened as prices went up. Hardware got pricier. Subscriptions got pricier. Peloton clearly took notes from the Netflix / YouTube TV school of “they’ll complain, but they won’t leave.” Problem is, this time… some of them did.

The market’s message was immediate and violent: if you’re going to raise prices, you’d better be growing. If you’re not growing, you’d better be cheap. Peloton somehow managed to be neither.

To their credit (and this is where the bulls cling for dear life) the company is improving profitability. Adjusted EBITDA beat expectations. Full-year EBITDA guidance was raised. Costs are coming down. Net debt is shrinking fast. From an operational standpoint, Peloton finally stopped lighting money on fire.

Which is great. Unfortunately, Wall Street would also like people to actually buy the bike (and use the software subscription).

Looking ahead, management admitted the slowdown isn’t done. Current-quarter revenue guidance came in light, signaling that this wasn’t a one-off miss… it’s a demand problem. When your core customer is staring down inflation, higher rates, and a gym down the street that costs $29 a month, selling $2,000 hardware plus rising subscriptions gets… tricky.

(Source: Wall Street Journal)

Then came the cherry on top: CFO Liz Coddington announced she’s leaving to “pursue an opportunity outside the industry.” Which, historically, is not something that makes investors feel calm and centered. She’ll stick around through March while Peloton hunts for its next financial adult.

At the time of publishing this article, Stocks.News doesn’t hold positions in companies mentioned in the article.