Peloton soars 30% after naming former Apple executive as new CEO

Peloton on Friday named a former Apple executive as its new CEO in hopes of revitalizing the struggling company — and the move immediately paid big dividends with the speed of stock about 30%.

Peter Stern, who founded Apple Fitness+ before moving on to his current role as president of Ford’s digital services business, is facing a tough turnaround for the exercise bike maker after the recession. while post-disaster demand.

Peloton has been run by interim CEOs since May, when Barry McCarthy, the former head of Spotify and Netflix, stepped down after just over two years.

Stern, 52, will take over as CEO and president on January 1.

“Peter is an experienced professional with a track record of driving sustainable growth through innovation, and we have great confidence in his ability to lead Peloton through this critical period,” said chairman- chair Jay Hoag in a statement.

“He brings valuable expertise in growing various technology-focused platforms and has a deep understanding of the health and wellness sector – making him uniquely suited to serve as Peloton’s next CEO.”

The company’s interim CEO Karen Boone will remain on the job until the end of the calendar year, while CEO Chris Bruzzo will step down on Friday.

Both Boone and Bruzzo will remain on the Peloton board.

Peloton – founded in 2012 – hopes Stern will help grow its customer base, as the company works to rely on ongoing subscription fees rather than one-time bike sales. .

In May, the company laid off 15% of its workforce – the fifth time it has cut the workforce since 2021 as it struggles to find its footing in the fitness industry.

Peloton shares were up 28% Tuesday, at $8.44 — after rising above $160 at the peak of the outbreak in December 2020.

Stern’s appointment comes as the Manhattan-based company reported a net loss of $900,000 in the first fiscal quarter ended Sept. 30 and warned of disappointing sales and registration numbers during the holiday season.

Peloton’s net loss was zero cents overall, beating expectations for a 16 percent loss. That was a big improvement from a net loss of $159.3 million, or 44 cents per share, in the same period last year.

Sales in the first quarter fell to $586 million, down 1.6% from $596 million last year but above expectations for $574.8 million.

But as Peloton gears up for the holiday season — typically its best quarter, along with many other retailers — the company warned that revenue could fall between $640 million and $660 million, below expectations of $671.4 million, according to StreetAccount.

Its subscription division is unlikely to be better. Peloton said it expects to have between 560,000 and 580,000 paid app subscribers at the end of the current quarter, below expectations of 608,200, according to StreetAccount.

In the first quarter, Peloton reduced operating costs by 30% compared to last year. It posted about $116 billion in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) and about $11 million in free cash flow.

The bike maker expects adjusted EBITDA between $20 million and $30 million during the current quarter, above estimates of $13.9 million, according to StreetAccount.

Despite the gloomy holiday forecast, the company raised its full-year EBITDA guidance to between $240 million and $290 million. Peloton expected adjusted EBITDA to be between $200 million and $250 million.

Peloton is forecasting revenue between $2.4 billion and $2.5 billion, which is in line with LSEG analysts’ expectations of about $2.5 billion.

The gains are due to aggressive cost-cutting measures and price increases.

During the first quarter, Peloton raised the recommended prices for its Bike and Bike+ in its international markets and raised the price of its Row in North America.