(Reuters) -Peloton Interactive shares jumped more than 7% in premarket trading on Friday after the fitness company beat quarterly revenue estimates, lifted by early momentum from its product lineup and higher prices across hardware and subscriptions, bolstering investor confidence in its turnaround efforts. The upbeat results mark a turning point for Peloton under CEO Peter […]
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Peloton shares jump as turnaround strategy gains traction
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(Reuters) -Peloton Interactive shares jumped more than 7% in premarket trading on Friday after the fitness company beat quarterly revenue estimates, lifted by early momentum from its product lineup and higher prices across hardware and subscriptions, bolstering investor confidence in its turnaround efforts.
The upbeat results mark a turning point for Peloton under CEO Peter Stern, who took the helm in January and has focused on restoring profitability, streamlining operations, and repositioning the brand for growth through a refreshed product lineup and pricing strategy.
“We are encouraged by Peloton’s progress across improving profit, ramping free cash flow, and deleveraging,” J.P.Morgan analysts said. “But it remains to be seen whether product and marketing initiatives are significant enough to drive durable revenue growth.”
Peloton also raised its annual core profit forecast. It now expects adjusted EBITDA between $425 million and $475 million, up 12% year-over-year at the midpoint and $25 million higher from its prior outlook.
Peloton recently re-launched its product portfolio with AI-powered features and raised prices across hardware and subscriptions and its move comes as shoppers pull-back spending on big-ticket discretionary items amid an unsteady economic environment.
Analysts at Bernstein said signs of margin improvement and balance sheet strength should support the stock in the near term, even as new product awareness and customer acquisition remain gradual.
Earlier on Thursday, Peloton said it was recalling about 833,000 units of its Bike+ model due to a safety issue with the seat post, which could break and detach during use. The recall, announced by the U.S. Consumer Product Safety Commission, echoes a similar issue that prompted a recall of the company’s base Bike model in 2023.
The company reported revenue of $550.8 million for the quarter, topping analysts’ average estimate of $539.82 million, as per data compiled by LSEG.
The stock trades at a price-to-earnings ratio of 79.95, reflecting expectations for continued earnings momentum.
(Reporting by Rashika Singh in Bengaluru; Editing by Shailesh Kuber)