spinning its wheels
Peloton borrows money from Wall Street after sales drop 15 percent
Peloton is running out of cash and its turnaround plan "can't happen fast enough," CNN Business reports. The company lost $757 million over the last quarter.
Its sales have continued to decline, CNN says, citing Tuesday's new quarterly financial report, and have dropped 15 percent from last year.
Peloton CEO Barry McCarthy said the company was left "thinly capitalized" at the end of the quarter, with $879 million in cash. "That forced the company to borrow a significant amount of money from Wall Street," a whopping $750 million, "to keep its operations running," writes CNN. This all comes after Peloton laid off 2,800 employees in February.
A lot of people took a hiatus from their local gyms at the start of the COVID-19 pandemic, but have since returned. However, that means Peloton is now struggling to sell bikes and subscriptions compared to last year. The company added just 195,000 new subscribers in the last quarter, less than half of what it added a year ago. To attempt to boost sales once again, the company is cutting the prices of its treadmills and bikes.
Peloton's downturn is "astonishingly bad," according to GlobalData managing director Neil Saunders. Even with further action, he predicted to investors, "Peloton would still be, at best, a low-profit company that delivers a poor return." Read more at CNN.