Peloton surges 30% after naming former Apple executive as new CEO
Peloton on Friday named a former Apple executive as its new boss in hopes of reviving the struggling company — and the move immediately paid big dividends with the stock racing nearly 30%.
Peter Stern, who co-founded Apple Fitness+ before moving on to his current role as president of Ford’s digital services business, faces the daunting task of steering a turnaround for the exercise bike maker following a post-pandemic demand slump.
Peloton has been run by interim co-CEOs since May, when Barry McCarthy, a former Spotify and Netflix executive, stepped down after just over two years.
Stern, 52, will take over as CEO and president on Jan. 1.
“Peter is a seasoned strategist with a track record of driving sustainable growth through innovation, and we have every confidence in his ability to lead Peloton during this important time,” Chairperson Jay Hoag said in a statement.
“He brings meaningful expertise in scaling differentiated technology-oriented platforms and has a deep understanding of the health and wellness sector – making him uniquely suited to serve as Peloton’s next CEO.”
The company’s interim co-CEO Karen Boone will remain in the role through the end of the calendar year, while co-CEO Chris Bruzzo will step down on Friday.
Both Boone and Bruzzo will remain on Peloton’s board.
Peloton — which was founded in 2012 — is hoping Stern will help expand its subscriber base, as the company works to lean on continual subscription fees instead of its one-time bike sales.
In May, the company slashed 15% of its workforce – the fifth time it reduced headcount since 2021 as it struggled to regain its footing in the fitness industry.
Shares of Peloton were up 28% Tuesday, at $8.44 — after peaking at more than $160 at the height of the pandemic in December 2020.
The appointment of Stern comes as the Manhattan-based company reported a $900,000 net loss in the first fiscal quarter ended Sep. 30 and warned of disappointing sales and subscription numbers during the holiday season.
Peloton’s net loss was effectively zero cents per share, beating expectations of a 16 cent per share loss. That was a significant improvement from the massive $159.3 million, or 44 cents per share, loss during the same period last year.
Sales in the first quarter dropped to $586 million, down about 1.6% from $596 million last year but above expectations of $574.8 million.
But as Peloton revs up for the holiday season – usually its best quarter, alongside most other retailers – the company has cautioned that revenue will likely fall between $640 million and $660 million, below expectations of $671.4 million, according to StreetAccount.
Its subscription division is not likely to fare any better. Peloton said it expects to have between 560,000 and 580,000 paid app subscribers by the end of the current quarter, below expectations of 608,200, according to StreetAccount.
In the first quarter, Peloton cut operating expenses by 30% compared to last year. It posted nearly $116 million in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) and about $11 million in free cash flow.
The bikemaker is expecting adjusted EBITDA between $20 million and $30 million during the current quarter, above estimates of $13.9 million, according to StreetAccount.
Despite the gloomy holiday forecast, the company raised its full-year EBITDA guidance to between $240 million and $290 million. Peloton previously expected adjusted EBITDA between $200 million and $250 million.
Peloton is forecasting revenue between $2.4 billion and $2.5 billion, falling in line with LSEG analysts’ expectations of nearly $2.5 billion.
The gains are thanks to aggressive cost-cutting measures and price hikes.
During the first quarter, Peloton raised the recommended retail prices for its Bike and Bike+ in its international markets and raised the price of its Row in North America.
