Peloton Interactive (PTON), a manufacturer of fitness equipment and videos for fitness, recently reported high revenue for the first quarter of the year, up 2.5 times from the same period last year – totaling $ 1.26 billion.
As a result of this, at the last check-in premarket trading, Peloton Interactive Inc. (PTON) shares were up 6.6% at $89.31. PTON’s stock closed the last session at $83.78, up 1.40% or $1.16. A share of the PTON stock fluctuated between $80.48 and $85.38 throughout the day. The number of shares exchanged was 46.08 million, higher than the PTON stock’s 50-day daily volume of 11.03 million. In the last 12 months, the stock has increased 120.30%, and in the last week, it has lowered -15.29%. The price-to-earnings ratio of the PTON stock is 167.23.
It also promised investors and shareholders that the suspension of sales of Tread and Tread + treadmills would not adversely affect its financial statements. Their duration will be short, according to the management.
It is estimated that the suspension of treadmill sales and the cost of recalling existing machines will result in a loss of approximately $ 165 million in revenue. According to John Foley, CEO of the PTON stock, the revenue forecast for the full 2021 fiscal year is being revised downward by $400,000 to $400,000 as a consequence.
As Bloomberg reports, however, investors were preparing for a bigger blow after Peloton announced the recall of simulators in conjunction with the US Consumer Products and Safety Commission. A regulator declared 70 injuries sustained by Pеloton treadmills posing a trauma that led to the death of one child.
Foley said that Peloton Interactive had planned to scale up the Tread production in the United States on May 27, but the mass launch has been delayed because of safety concerns. A regulator approval will be required after the equipment design has to be altered to meet compliance requirements. A software update is planned for the Tread+ treadmill, which will require a password to use.
In a letter to shareholders, Peloton said supply chain disruptions before the pandemic outbreak had been resolved – the average delivery time of exercise bikes to customers is now below pre-pandemic levels. According to the PTON stock, Peloton is expected to sell three times the amount of bikes as they did in the same quarter of last year.
Peloton Interactive is planning a $100 million investment to improve the supply situation. An effort to expand its manufacturing capacity in the United States has recently been completed by this company with the acquisition of Precor for 420 million dollars.