Why One of the Hottest IPOs of 2020 May Be Cooling Off

By Chris Lange Updated Feb 5, 7:02AM EST · Published Feb 4, 4:36PM EST

Why One of the Hottest IPOs of 2020 May Be Cooling Off — © Scott Heins / Getty Images

Peloton Interactive Inc. (NASDAQ: PTON) released its fiscal second-quarter earnings report after the closing bell Thursday. This was one of the hottest IPOs of last year, withstanding the pandemic. Despite the eye-popping numbers we saw this quarter, will these be enough to carry Peloton even higher?

The firm said that it had $0.18 in earnings per share (EPS) and $1.06 billion in revenue, which compares with consensus estimates calling for $0.09 in EPS and $1.03 billion in revenue. The same period of last year reportedly had a net loss of $0.02 per share and $466.3 million in revenue.

During the most recent quarter, total revenue increased 128% year over year. Connected Fitness Product revenue was $870.1 million, representing 124% year over year growth and 82% of total revenue. Subscription revenue was $194.7 million, a 152% year over year increase, and 18% of total revenue.

Peloton ended the quarter with 1.67 million Connected Fitness subscribers, an increase of 134% year over year. As of quarter’s end, 97% of Connected Fitness subscribers were on month-to-month payment plans. At the same time, the company boasted 625,000 Digital subscribers, up 472% from last year.

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Connected Fitness Subscription Workouts grew 303% in the first quarter to over 98.1 million, averaging 21.1 Monthly Workouts per Connected Fitness Subscription, versus 12.6 in the same period last year.

Cash, cash equivalents and marketable securities totaled $2.1 billion at the end of the quarter. The firm also has additional liquidity of $250.0 million in the form of an undrawn revolving credit facility.

Looking ahead to the fiscal third quarter, the company expects to see total revenue reaching $1.1 billion and an adjusted EBITDA of $10 million. The consensus estimates are calling for $0.04 per share and $1.09 billion in revenue for the quarter.

Shares of Peloton closed Thursday at $157.53, in a post-IPO range of $17.70 to $171.09. The consensus price target is $155.42. Following the announcement, the stock was down 6% at $147.08 in the after-hours trading session on Thursday.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.