Peloton (NASDAQ:PTON) was a hot buy during the early stages of the pandemic when lockdowns were keeping people indoors and its workout equipment was in high demand. In 2020, the stock skyrocketed more than 430%. This year, however, has been a different story as its shares are down more than 63%.
The company reported its first-quarter results last week and investors weren't impressed. Its loss per share of $1.25 was higher than the $1.07 loss analysts were expecting. Meanwhile, its quarterly sales of $805.2 million were also below Wall Street projections of $810.7 million. With year-over-year revenue growth of just 6%, it definitely looks as though things are starting to slow down for the company. In the previous quarter, the company's top line grew by a staggering 54%.
Peloton also adjusted down its guidance as it noted in its shareholder letter that, "a softer than anticipated start to Q2 and challenged visibility into our near-term operating performance is leading us to recalibrate our fiscal year outlook." And for the period ending Sept. 30, the company burned through $561 million in cash from its day-to-day operations. A year ago, it generated positive cash flow of more than $312 million.
This is a risky stock to own right now as the business isn't profitable (and it won't be until fiscal 2023, and that's on an adjusted EBITDA basis), growth has slowed, and the company is burning through loads of cash. Even if you're bullish on Peloton over the long term, a good move may be to wait out this decline, as it may not be over just yet.
