Peloton Crushes Forecasts But Cuts Guidance Amid Treadmill Recall

High-end exercise equipment maker Peloton(PTON) easily topped fiscal Q3 estimates and trimmed its guidance after announcing a voluntary recall of its treadmills. Peloton stock rose.

Peloton Earnings ReportEstimates:Per-share losses are seen narrowing to 11 cents from 20 cents a year ago, as revenue jumps 112% to $1.11 billion.

Results:Loss of 3 cents a share on revenue of $1.26 billion. Connected Fitness subscriptions grew to more than 2.08 million, up 135% from a year ago and up 24.6% from fiscal Q2. Digital-only subscribers increased to 891,000, up 404% from a year ago and up 42.6% from Q2.

On a conference call, management said it will postpone the launch of new treadmills and will add a digital passcode to unlock existing ones via an over-the-air software update in the coming days. A hardware fix will come later.

Outlook: Peloton guided Q4 revenue to $915 million, including the recently completed acquisition of Precor as well as recall-related impacts of $165 million. For the full fiscal year, management trimmed its revenue view to $4 billion from $4.075 billion. Analysts see revenue of $1.17 billion in Q4 and $4.11 billion for the year.

Peloton maintained its fiscal year Connected Fitness subscriber outlook at 2.275 million. Management also said that while bike sales are tapering, they are still expected to be more than three times 2019 levels.

Stock: Shares reversed higher to climb 5.93% late after closing up 1.4% at 83.78 on thestock market today. Peloton stock fell below its 50-day and 200-day lines last month on initial reports of the treadmill's safety concerns, according toMarketSmith chart analysis.Among other stocks targeting online fitness,Lululemon(LULU) edged down 0.25%, andNike(NKE) gained 1%.Under Armour(UAA) eased 3.25% after Wednesday's 7% jump.

Treadmill Recall Slams Pelton Stock

In April, the Consumer Product Safety Commission said users with small children or pets should stop using the company's treadmill following the death of a child.

Peloton initiallypushed back against the announcementcalling it "inaccurate and misleading."

But on Wednesday, Peloton issued a voluntary recall of all its Tread+ and Tread treadmill machines warning customers to stop using the equipment and to contact the company for a refund. Peloton stock tumbled 15% Wednesday.

"I want to be clear, Peloton made a mistake in our initial response to the Consumer Product Safety Commission's request that we recall the Tread+. We should have engaged more productively with them from the outset. For that, Iapologize," Peloton CEO John Foley said in a CPSC release.