Peloton shares fall after it posts wider-than-expected loss, falling sales due to Bike recall, seasonality

Peloton shares fell sharply after the fitness company reported a wider-than-expected loss and declining sales for the third quarter ending March 31. The declines were driven by a recall of its popular Bike product and the ongoing effects of seasonality. After market close, Peloton's share price fell nearly 15% in after-hours trading, posting a loss of nearly 400 points. The sell-off came after the company reported revenue of $228 million, down 14% from the prior year period and missing the Wall Street consensus estimate of $272.9 million. The company also reported a net loss of $25 million or $(0.25) per diluted share, significantly wider than the consensus estimate of $(0.16) per diluted share. Peloton attributed the loss to price concessions taken due to the recall and a significant increase in warranty claims and returns during the holiday shopping period. The company also suffered lower product sales compared to the same period last year due to a drop in sales of its Tread and Bike products amid the recall. Peloton believes the recall and seasonality were the main drivers of its results, with the former having a greater effect. The company expects sales patterns to normalize over the course of the year and is introducing new products, such as the Peloton Bike+, to drive demand in the fourth quarter. Peloton is also looking to introduce new products in the near term to further increase customer engagement.