Peloton drops 6% after the cycle-maker said it's struggling to keep up with surging demand for its flagship fitness products

Peloton

• Peloton's shares dropped 6% in pre-market trading after posting second-quarter earnings.
• The cycle-maker said it would invest $100 million to accelerate the speed of product deliveries worldwide.
• Wedbush maintained its outperform rating on Peloton as analysts expect the at-home fitness trend to last.
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Peloton fell 6% in pre-market trading on Friday after the company said it continued to struggle with delivering its bike and treadmill products on time.

The company reported its first ever billion-dollar quarter on Thursday, helped by a boom in demand for fitness products during the holiday season. But over the past year, Peloton's customers have complained of months-long waits, delivery delays, and last-minute cancellations.

Manufacturing lags were not the only challenge for deliveries. Shortages of containers, extended port delays, and a backlog to get containers unloaded were other problems the company faced, finance chief Jill Woodworth told the Financial Times.

Pandemic-related factors continue to hurt the business. So, Peloton has now invested $100 million to accelerate the pace of air and ocean freight to boost its "longer than acceptable wait times" over the next six months. 

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"While this investment will dampen our near-term profitability, improving our member experience is our first priority," Peloton said. 

 The company now expects full-year revenue to exceed $4 billion, up from a prior outlook of over $3.9 billion. Wedbush raised its 12-month price target on Peloton to $162 from $160, maintaining an "outperform" rating.

That's because analysts say the company is unfazed by the momentum of COVID-19 activity because there is a favorable shift away from traditional gyms and toward at-home fitness.

Peloton's stock closed at $157.53 on Thursday, but was lower, around $146, in pre-market trading on Friday.

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