Investing.com -- Peloton Interactive (NASDAQ:PTON) shares cratered in premarket trading on Wednesday after the exercise equipment group delivered smaller-than-expected first-quarter revenue forecasts and issued a cash flow warning.
The New York-based maker of connected bikes was boosted by a spike in demand from shut-in customers during the pandemic, but that spike has waned as more customers choose to go in person to gyms.
This issue has been compounded in recent months by a shift in consumer spending habits from goods to activities like travel. Shoppers have also been less likely to open up their wallets for nonessential items in response to high inflation and economic uncertainty.
Revenue in the company's fourth quarter subsequently dropped to $642.1 million, down from $678.7M in the same period last year, as a decline in sales from its key connected fitness offerings offset a 4% uptick in subscription revenue.
Meanwhile, in a letter to shareholders, Peloton predicted that revenue in its first quarter would be between $580M and $600M, missing Bloomberg consensus estimates for an outlook of $647.8M.
It added that it does not currently expect to remain free cash flow positive in its two upcoming quarters, citing the impact of seasonality of its hardware sales, the timing of inventory payments, and marketing expenditures.