Barry McCarthy, Peloton Interactive Inc. (NASDAQ: PTON) chief executive officer, continues to say the bike and rowing machine company will turn the corner or has begun to do so. It is not that he is dodging the truth. The fact is that there is no evidence to show he is correct. Peloton\u2019s situation worsened as it disclosed earnings for the most recent quarter. Investors trashed the company’s shares, then they recovered slightly on comments by McCarthy that the figure showed Peloton was \u201cmaking significant progress.\u201d Not so.<\/p>\n
McCarthy’s description of a healthy company is one that is \u201cfinancially stable\u201d and has \u201cbreakeven or better cash flow.\u201d Why the goal is a company that breaks even is anyone\u2019s guess.<\/p>\n
The numbers are the numbers, no matter how McCarthy wants to spin them. Revenue dropped 23% year over year to $617 million. Peloton lost $409 million. And the company forecasted it would take a bath in the current quarter, which for retailers, is the most important period of the year.<\/p>\n
McCarthy\u2019s letter described Peloton\u2019s situation in great detail. The best sentence from the letter was this: \u201cBut the green shoots are numerous and undeniable.\u201d He must be among the few people who see this. Peloton\u2019s shares are down 75% this year, and most of that has occurred while McCarthy has been in his job.<\/p>\n
Peloton is painted into a corner. The most oft-mentioned problem is that exercise bikes were popular when the COVID-19 pandemic was at its most dangerous. People stopped going to gyms. Fewer people dying has helped gym traffic rebound.<\/p>\n \t\t\t\t