September 30, 2022

Peloton is burning through cash and borrowing like crazy to stay afloat

2 min read

The once hot company reported a disappointing quarterly financial report on Tuesday, in which sales fell 15 percent from a year earlier. Pilot lost 75 757 million in the last quarter.

Pilot (PTON) CEO Barry McCarthy said he had only 87 879 million in cash at the bank at the end of the quarter, which made him “thinner capitalist”. It forced the company to borrow large sums of money from Wall Street to continue its work.

As people return to Jammu, Pilot has been struggling to maintain its electrical growth since the early days of the epidemic. Motorcycle and subscription sales have stopped. The company has a lot of inventory, and demand is declining.

To counter this, McCarthy reduced its prices. Treadmills and bikes. McCarthy said that led to a 69 percent increase in daily sales. It also plans to sell pilot products to third-party retailers for the first time.

“Turnaround is hard work,” McCarthy bluntly told investors in a shareholder letter. “It’s mentally challenging, emotionally exhausting, physically exhausting, and all-consuming. It’s a full-fledged communication game.”

But the company’s return – if any – is slower than Wall Street’s wishes. Pilot added just 195,000 new subscribers in the last quarter, less than half of what it was adding a year ago. And the company said it would post about ً 700 million in sales this quarter, less than investors expected.

Shares of Pilot fell 19% in pre-market trading. The stock has been down nearly 90% since the end of 2020, when it reached its all-time high.

To keep it going, McCarthy said Pilot is borrowing $ 750 million from JPMorgan and Goldman Sachs on a five-year loan, two banks that helped underwrite his IPO.

McCarthy said: “I would like to thank everyone involved for their hard work in completing this important financing and reporting on our progress in reshaping the pilot business in the coming quarters. Wait. ”

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