The once-hit company released a dismal quarterly financial report on Tuesday, with sales down 15% from a year ago. Peloton lost $757 million last quarter.
As people return to gyms, Peloton has struggled to sustain its electric growth since the early days of the pandemic. Sales of bicycles and subscriptions have stagnated. The company has too much inventory and demand is falling.
“Turnarounds are hard work,” McCarthy told investors bluntly in a letter to shareholders. “It’s intellectually challenging, emotionally draining, physically exhausting and all-consuming. It’s a full-contact sport.”
But the company’s comeback – if there is one – is slower than Wall Street would like. Peloton added just 195,000 new subscribers last quarter, less than half of what it added a year ago. And the company said it would post sales of around $700 million this quarter, well below what investors had expected.
Peloton shares slid as much as 19% in premarket trading. The stock is down about 90% since hitting an all-time high at the end of 2020.
To stay afloat, McCarthy said Peloton is borrowing $750 million in five-year term debt from JPMorgan and Goldman Sachs, two banks that helped underwrite its IPO.
“I want to thank everyone involved for their hard work in bringing about this important funding and I look forward to reporting on our progress in reshaping Peloton’s business in the quarters to come,” McCarthy said.