Peloton has suffered its worst day as a publicly traded company after telling investors that it is likely to lose more money than it had expected in fiscal 2022.
The New York City firm thrived during the pandemic, recording its first and only profitable quarters as people were unable to hit the gym, instead setting up places to work out at home.
Sales of its high-end bikes and treadmills soared, as did subscriptions for its online, interactive classes.
Those sky-high sales have stalled, however, since the rollout of Covid-19 vaccines.
Gyms have reopened, with some restrictions, and people are beginning to spend money on other things, such as travel and restaurants.
Late on Thursday, the company said it expects those lucrative subscriptions to drop 6% and losses in 2022 of between 425 million dollars (£315 million) and 475 million dollars (£352 million).
That is a lot more red ink than its previous guidance of 325 million dollars (£241 million) in losses.
Peloton has other problems.
It is wrestling with the same snarled global supply chains that have plagued manufacturers this year as economies reopen.
What is more, gyms that had closed during the pandemic began offering their own virtual classes, further encroaching on one of the company’s greatest strengths.
It is also recovering from a recall of its treadmill machine, something it had fought, after it was linked to the death of a child and numerous injuries.
“Given the unprecedented circumstances presented by the global pandemic, we said last quarter that modelling the exit from Covid and the massive growth we saw in fiscal 2021 would be a challenging task, and that has certainly proven to be true,” chief executive John Foley told investors on a conference call.
Shares tumbled 33% to 60.14 dollars on Friday, the worst trading day for the company just 10 months after shares hit an all-time high above 171 dollars.
Peloton’s early success also brought new competition, companies that offered cheaper bicycles and exercise equipment.
In August, the company cut the price of its Peloton Bike – its marquee technology – to 1,495 dollars (£1,100) from 1,895 dollars (£1,405).
Industry analysts were quick to cut expectations for the company on Friday, with one citing “rapid deterioration” in Peloton’s guidance for next year.
Scott Devitt, of Stifel, said he had believed Peloton would continue to grow even with the worst of the pandemic seemingly in the rear view mirror.
He is recalibrating that opinion.
“Now, given the materially lower expectations, we expect it will take several quarters to determine a more normalised pace of growth, or more sceptically, whether or not the revised outlook is an indication that the core product may be closer to maturity in existing markets than previously thought,” Mr Devitt wrote to clients.
Peloton reported sales of 805 million dollars (£597 million) for the first quarter of fiscal 2022, close to most Wall Street targets.
But Wall Street focused on what is to come.
The company lowered its sales expectations to a range of 4.4 billion dollars (£3.2 billion) to 4.8 billion dollars (£3.5 billion) in 2022, well below the 5.3 billion dollars (£3.9 billion) analysts had forecast.