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Peloton shares are spiking Wednesday despite the company losing $335.4 million in its latest quarter and revenue tumbling 30% to $792.7 million.
The fitness and media company forecast current-quarter revenue above expectations, in an early sign that its efforts to boost sales, including by selling on third-party platforms, were beginning to yield fruit.
For the third quarter, Peloton forecast revenue between $690 million and $715 million, above expectations of $689.1 million, as per Refinitiv data.
![](https://a57.foxnews.com/static.foxbusiness.com/foxbusiness.com/content/uploads/2020/02/931/523/Peloton-Bike-3.jpg?ve=1&tl=1)
In an interview with FOX Business, Adam Kobsissi, founder of the financial newsletter, The Kobeissi Letter, said "Overall, it was a disappointing quarter for Peloton, except that markets see the 10% jump in connected fitness subscriptions as a strong bullish indication."
"Margins are significantly higher for this recurring revenue segment," he continued. "Gross margins for its connected fitness products were - 11.2%, but gross margins for subscription sales were +67.6%."
However, "This is just a case of markets looking for a reason to rally after a severely oversold technical picture developed," he added.
In its latest quarter, Peloton reported 6.7 million members, down 1% year-over-year, and a 10% increase in connected fitness subscriptions to 3.033 million. In the September quarter, the company showed 2.973 million ending connected fitness subscribers.
![Hilton Honors member using Peloton app](https://a57.foxnews.com/static.foxbusiness.com/foxbusiness.com/content/uploads/2022/10/931/523/Hilton_Peloton_3.png?ve=1&tl=1)
In addition to access to the Peloton Bike, Hilton Honors members who are first-time Peloton users will receive a free 90-day trial to the fitness giant's app, which offers thousands of live and on-demand classes without the need for equipment, as wel (Peloton/Hilton)
While subscriber growth has been bullish, Kobeissi said, "There are no long-term merits for the company now that Peloton has become a product instead of a company."
"Only a matter of time before the hype dies off," he finished.
Free cash flow was an outflow of $94 million after peaking at $747 million nine months ago.
The company kept its goal of break-even free cash flow by the end of fiscal 2023, a key milestone being watched by investors.
Year-to-date, the stock is up more than 90%. Over the last year, Peloton shares remain off by more than 40%.
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Peloton Interactive
Ticker | Security | Last | Change | Change % |
---|---|---|---|---|
PTON | PELOTON INTERACTIVE INC. | 15.66 | +2.73 | +21.11% |
Reuters contributed to this report.
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