Peloton (PTON) shares are surging in pre-market trading — and rising by over 10% after Thursday's market open — after posting narrower-than-expected losses of $0.08 per share and revenue of $643.6 million for its fiscal fourth quarter. Once considered a "pandemic darling," the home exercise equipment manufacturer's stock has dramatically fallen off of its 2021 highs and is still down by over 30% in 2024 year-to-date.

Needham & Company Managing Director Bernie McTernan joins The Morning Brief to talk about Peloton's stock reaction to its latest earnings figures.

"Generally, margin beats aren't treated very favorably by the Street. And so, I mean the key is getting revenue back to where the trajectory of where Barry McCarthy, prior CEO, was looking for where he was willing to take the margin hit near term to really grow that subscriber base and gain enthusiasm," McTernan explains.

"And so that's what the company is working on right now, is basically the opposite, is really trying to refine that LTV to CAC equation [customer lifetime value (LTV), customer acquisition cost (CAC)] because ultimately this business can't be declining 10% revenue growth forever, they need to get back to growth at some point."

McTernan comments on what Peloton investors may be looking for in a new chief executive and content from new fitness programs and social exercise groups may challenge Peloton's growth.

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This post was written by Luke Carberry Mogan.