Peloton (PTON) shares tumbled about 5% in after-hours following a better-than-expected quarter and boost t its full-year forecast. However the connected fitness platform company cited ‘longer than acceptable wait times’ for its products that would affect near-term profitability.
“Over the last several months, we remain inventory constrained with longer than acceptable wait times for the delivery of our products. To directly address this situation, we will be incrementally investing over $100 million in air freight and expedited ocean freight over the next six months in order to improve our order-to-delivery windows,” said Peloton’s letter to shareholders.
“While this investment will dampen our near-term profitability, improving our Member experience is our first priority,” said the letter.
These are the company’s fiscal 2nd quarter results compared to Wall Street analysts consensus estimates compiled by Bloomberg.
Revenue: $1.06 billion vs estimate of $1.03 billion
Adjusted EPS: 18 cents/share vs estimate of 10 cents/share
Connected fitness subscribers: 1.67 million vs estimate of 1.64 million
Investors will pay close attention to commentary during the company’s earnings call about supply chain issues, especially as they relate to the company’s high-end Bike+ model. Last year, longer-than-expected delivery times and some temporary warehouse closures challenged Peloton’s ability to meet full demand for its equipment.
In November, Chief Financial Officer Jill Woodworth said growth in the company’s supply chain would allow for normal order-to-delivery time frames by the end of the calendar year. However, supply constraints would continue to cause longer order-to-delivery time frames for Bike+ for a couple more quarters.
In December, Peloton announced it will acquire fitness equipment maker Precor for $420 million, with factories in North Carolina and Washington. The acquisition is intended to boost Peloton’s U.S. manufacturing capacity.
Year-to-date Peloton shares are up about 2%, but over the last year, they have gained more than 360%. Wall Street analysts have 25 Buy ratings, 2 Hold, and 2 Sell on the stock.
Ines covers the U.S. stock market. Follow her on Twitter at @ines_ferre
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