Peloton Delivers Poor Earnings Report, Gets Subpoenaed By The DOJ and DHS

The past 24 hours haven’t been kind to Peloton, with the company reporting poor earnings for the previous quarter, and it is now in trouble with the authorities.

Peloton’s Q4 Earnings Report Was Poor

Peloton reported poor earnings for the fourth fiscal quarter yesterday, performing below what analysts had expected. The company’s revenue for the previous quarter was $936.9 million vs. the $927.2 million that was expected. However, the loss per share was $1.05 vs. the 45 cents that was expected.

In the last quarter, the fitness commodity manufacturer recorded a net loss of $313.2 million, or $1.05 per share. This is poor compared to the net income of $89.1 million, or 27 cents a share recorded in Q4 last year.

Although the total revenue of $936.9 million surpassed the analysts’ estimate of $927.2 million, it has slowed down from the $1 billion recorded in the third fiscal quarter. According to Peloton, its earnings could further be hurt in the short term as the company will reduce the pcost of its original Bike Machine by nearly 20%. In addition to these, Peloton said it would also be focusing some of its attention on its treadmill business, which has shown to be less profitable than its bicycles.

DOJ And DHS Subpoena Peloton

Peloton got into further trouble after the company revealed that the United States Department of Justice (DOJ) and the DHS (Department of Homeland Security) had subpoenaed it. The company has submitted documents and other data related to injuries reported by some of its customers.

The case stretches as far back as earlier this year when Peloton issued a recall of its treadmill machines, the Tread and the Tread+. The recall came after a child was killed in an accident, with several other users reporting injuries. Peloton resisted recalling the treadmill machines at the time despite regulatory pressure to do so. The company also revealed that it is currently being investigated by the SEC for its public information regarding the said injuries.

The poor earnings report and the investigation by authorities have sent Peloton’s stock price tumbling over the past few hours. PTON is down by over 7% in the past 24 hours and could slip lower if the negative press continues.

Year-to-date, PTON is down by over 30%. The stock began 2021 trading at $151 per share, but it is now trading around $106 per share.