You win some, you lose some. Peloton did both this week: Despite beating earnings and revenue expectations with quarterly revenues up 77% at $466 million, its stock is slumping over 10% due to $55 million in quarterly losses and slowing growth from the prior quarter. Peloton stock is currently trading at its IPO price from a year ago of $29 per share. The markets are showing little tolerance for not-yet-profitable startups with big dreams. Yesterday, similarly unprofitable Casper, the mattress company, reduced its IPO share price by 30%.
Meanwhile, Peloton logged what it calls a “massive win” against competitor Flywheel, settling a year-old lawsuit in which Peloton had claimed Flywheel copied its on-demand streaming-classes technology, particularly its “leaderboard,” which allows riders to compete against each other. According to their settlement, Flywheel admitted multiple patent infringements and will stop using the technology.
The lawsuit was juicy: Peloton claimed that a Flywheel investor—Michael Milken, who previously served prison time for felony securities-law breaches—lied to Peloton’s CEO, John Foley, at a conference, claiming to be a potential investor, and instead gathering information for Flywheel. That tidbit was not addressed in the settlement filing.
Peloton’s 712,005 subscribers are an active bunch, averaging 12.6 workouts a month. CFO Jill Woodworth says the company is focused on nurturing them over profitability, which will appear by 2023.
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