Peloton shares soar 20% on better-than-expected Q2

Peloton Interactive on Wednesday forecast current-quarter revenue above expectations, in an early sign that its efforts to boost sales, including by selling on third-party platforms, were beginning to yield fruit.

Shares of the fitness equipment maker jumped 20% to $15.50 after it also reported a slowing cash burn on a string of cost-cutting measures.

Peloton was all the rage among fitness enthusiasts during COVID-19 lockdowns, with the company hitting hit a peak market value of nearly $50 billion in early 2021. But with people returning to gyms the company saw demand for its equipment dwindle.

In response, the company had announced plans to sell its fitness equipment on e-commerce giant Amazon and at Dick’s Sporting Goods stores.

Peloton CEO Barry McCarthy, in a letter to investors, outlined goals of returning to revenue growth and reach cash flow breakeven on a sustained basis in his second year in the role.

Analysts, however, say it is likely to be a bumpy ride for Peloton in the coming months, with some less than impressed with the latest quarterly report.

“The business model still has a lot to prove, and further time is need to assess whether it is viable or on a path to further decline,” said Neil Saunders, managing director of GlobalData.

For the third quarter, Peloton forecast revenue between $690 million and $715 million, above expectations of $689.1 million, as per Refinitiv data.

The company kept its goal of break-even free cash flow by the end of fiscal 2023, a key milestone being watched by investors.

However, Peloton said challenging economic conditions were impacting consumer spending patterns and that near-term demand for connected fitness hardware is likely to remain challenged.

Meanwhile, the company’s net loss narrowed to 98 cents per share in the second quarter, but it was bigger than expectations of a loss of 64 cents.

Cash burn fell to $94.4 million from $546.7 million.