Peloton produces profit for the first time amid pandemic-demand spike, stock pushes toward new record


Peloton Interactive Inc. reported fiscal fourth-quarter earnings Thursday afternoon.


MarketWatch photo illustration/iStockphoto

A year after its initial public offering, Peloton Interactive Inc. is pedaling toward new highs amid a pandemic that is forcing people into their homes and away from gyms, creating demand for at-home fitness equipment.

Peloton
PTON,
-3.75%

on Thursday wrapped up its fiscal year by reporting that sales and subscribers roughly doubled in the 12-month period, and revealed its first profitable quarter as a public company and record quarterly revenue a little less than a year after its September 2019 IPO. Shares fell 3.8% Thursday from Wednesday’s record closing price of $91.17 — more than three times the IPO price of $29 a share — but pushed back toward record highs in after-hours trading following the release of the report, with gains of more than 7%.

Peloton reported fiscal fourth-quarter profit of $89.1 million, or 27 cents a share, on sales of $607.1 million, up from $223 million a year ago. Peloton reported a net loss of $47 million in the fiscal fourth quarter a year ago, just ahead of its IPO. Analysts on average expected earnings of 10 cents a share on sales of $586 million, according to FactSet.

“It has been another staggering year of growth, and I know all parts of the organization have had to work together to do everything possible to meet the incredible demand for our products and services,” Chief Executive James Foley said in a conference call Thursday. “The strong tailwind we experienced in March as the COVID-19 pandemic took hold has continued to propel demand for our products into the fourth quarter and first couple of months of Q1 fiscal year 2021.”

While still attempting to catch up to a flood of orders amid the COVID-19 pandemic — Peloton said Thursday it does not expect order-to-delivery times to normalize until around the end of the calendar year — the company is also looking to expand its customer base. On Monday, Peloton announced that it will reduce the price of its standard exercise bike and introduce a lower-priced treadmill, which could clear a path for potential buyers who were not willing to pay the large upfront costs for its products. It will also introduce a premium bike for fans who want top-of-the-line equipment.

Wedbush analysts noted that in a previous survey of 1,200 people, they found that Peloton could “dramatically improve” sales at a lower price point, especially in treadmills.

“42% of non-Peloton owners that were interested in fitness and familiar with the brand showed some level of interest in a $2,500 Tread, compared to just 30% showing interest in the current Tread,” the analysts wrote in a Sept. 9 note, after Peloton announced its new lineup. “Among existing Peloton bike owners, the number of respondents saying they would be ‘very interested’ in owning a treadmill from Peloton doubles based on the lower price, from 14% based on the $4,295 price point to 28% assuming a theoretical (at the time) $2,500 price point.”

While lower sales prices could hurt hardware margins and average selling prices, much of Peloton’s long-term prognosis focuses on the subscriptions for interactive workout media that owners continue to pay after they have received the equipment. Peloton announced Thursday that it now has 1.09 million subscribers, nearly doubling the 511 million that it reported at the end of its last fiscal year, topping its forecast of 1.04 million to 1.05 million.

In total for the fiscal year, Peloton collected revenue of $1.46 billion from the sale of equipment and $363.7 million from subscription services, up from $719 million and $181 million, respectively, in the previous fiscal year. Combined with other revenue from merchandise and other offerings, Peloton ended the year with $1.83 billion in sales, up from $915 million.

“By the end of FY 2020 our Peloton membership base grew to approximately 3.1 million, compared to 1.4 million members in the prior year,” Peloton detailed in a letter to shareholders Thursday. “Fueled in part by the challenges associated with COVID-19, member engagement reached new highs with 164 million Connected Fitness Subscription workouts completed in FY 2020.”

For the current fiscal year, which began in August, Peloton predicted htat subscribers and revenue would roughly double yet again. The company guided for revenue of $3.5 billion to $3.65 billion, with connected subscribers swelling to 2.05 million to 2.1 million. Analysts on average were predicting revenue of $2.74 billion and subscribers of 1.78 million ahead of the report, according to FactSet.

Peloton stock has gained more than 260% since its IPO; the S&P 500 index
SPX,
-1.75%

has returned 17.7% in that time. In after-hours trading Thursday, shares topped $94 following the release of the report.



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AstraZeneca stock falls as drugmaker pauses vaccine trial after volunteer’s ‘unexplained illness’


Shares in AstraZeneca fell on Wednesday after the drugmaker said it has paused late-stage trials of its coronavairus vaccine candidate following an unexplained illness in one of the trials’ volunteers.

AstraZeneca
AZN,
-1.07%

said it was a “routine action” and that unexplained illnesses can happen “by chance” in large trial and must be independently reviewed.

In an emailed statement, AstraZeneca said: “As part of the ongoing randomised, controlled global trials of the Oxford coronavirus vaccine, our standard review process was triggered and we voluntarily paused vaccination to allow review of safety data by an independent committee.”

It added that it is working to expedite the review of the single event to minimize any potential impact on the trial timeline. “We are committed to the safety of our participants and the highest standards of conduct in our trials.”

A report in the New York Times said that the volunteer in the U.K. trial received a diagnosis of transverse myelitis, an inflammatory syndrome that affects the spinal cord. “However, the timing of this diagnosis, and whether it was directly linked to AstraZeneca’s vaccine, is still unknown,” the NY Times said. The British drugmaker declined to the comment on the location and the diagnosis.

Shares in AstraZeneca
AZN,
+2.10%
,
which fell 6% in New York in after-hours trading on Tuesday after STAT first reported that the trial had to be stopped, were down 1% in early European trading.

Analysts at Citigroup said the risk of a serious adverse event (SAE), potentially vaccine-related, was always “a high probability event” in one of the multiple large Covid-19 trials.

“We have limited information on the single SAE aside from it occurred in the UK trial and the patient is expected to recover albeit almost certainty currently hospitalised,” the analysts wrote in a research note on Wednesday.

“[Tuesday’s] development may negatively impact timelines for other Covid-19 vaccine sponsors. While AZN’s current share price is discounting little economic value from Covid-19, we expect an initial negative stock and broader market reaction today in response to the news,” the analysts added. But they cautioned that they are “hesitant” to draw any conclusions in the absence of further information.

Analysts at Jefferies said they envisage a short-term stock correction “which may prove misplaced”.

On Tuesday the CEOs of nine companies, including AstraZeneca, BioNTech
BNTX,
+2.15%
,
Johnson & Johnson
JNJ,
-0.89%
,
Moderna
MRNA,
-13.19%

and Novovax
NVAX,
-8.20%

made a joint pledge to “stand with science” on coronavirus vaccines, making clear that they would not move forward with such products before demonstrating their safety and efficacy.

AstraZeneca’s halts covers studies in the U.S. and other countries and could derail the plans of President Donald Trump, who reportedly hopes to fast-track approval of the vaccine in a bid to make it available to Americans before November’s election.

The news comes just two days after Britain’s health secretary Matt Hancock said the vaccine, which is being developed in collaboration with the University of Oxford, would “most likely” be available in the first few months of 2021.

Read: AstraZeneca vaccine ‘most likely’ to roll out in the U.K. early next year

On Wednesday, British Prime Minister Boris Johnson is set to announce new measures aimed at curbing the spread of the virus after a sharp rise in daily coronavirus cases in the country.

Since Sunday, there have been 8,396 new cases reported – with 2,460 reported on Tuesday alone, according to government data. There were also 32 deaths reported, though these will not relate to the most recent rise in cases.

The new rules will include banning social gatherings of more than six people in England from Sept. 14. The new rule applies to private homes, indoors and outdoors, and places such as bars and cafes, but will not apply to schools and workplaces.

Michael Hewson, chief market analyst at CMC Markets UK, said, it was only a matter of time before a setback like this were to happen, given the complexities of trying to get a vaccine to a virus that is still very new.

“We already know from the number of flu vaccines that an immunization program is not a magic bullet, and with the UK looking to re-tighten social gathering restrictions from the beginning of next week, investors will have to come to terms with the idea that the path out of the current crisis is likely to be choppy and much more prolonged than previously thought,” Hewson said.

Read:U.K. signs deals with BioNTech, Pfizer, and Valneva for COVID-19 vaccines

The U.K. has placed orders for six experimental vaccines, taking its potential stockpile to 340 million doses. In August, the government announced in August that it will buy 90 million doses of potential Covid-19 vaccines from Johnson & Johnson and U.S. drug developer Novavax.



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My partner has earned millions of dollars during our relationship. We’re not married, but am I entitled to anything if we split?


Dear Moneyist,

My partner and I have been together for 5 years. We are not married. In that time he has been the primary and, often, the sole breadwinner.

When we met, he had several million dollars in investment accounts as well as earning a substantial salary ($400,000 to $800,000 a year depending on bonuses). In that time, he paid off previous debt that I had incurred. We have lived a good life with lots of travel, and many other luxuries.

At one point he was offered a job in Europe and I left my new job in the U.S. to join him, a decision that left me unable to earn an income and continue to depend on him for his money.

The Moneyist: ‘I’m astounded that I have NOT received my payment’: When will I receive my stimulus check?

We share a couple of joint bank accounts, but the vast majority of his money is in accounts in his name only. I have never thought that money should be under both of our names as that was money he had earned before we had even met.

In the time we’ve been together he has made $2 million to $3 million in income, and he has sold real estate that was owned before we met totaling $1 million. If we separated in the U.S., would I be entitled to anything from him?

John

Dear John,

The short answer is no.

Now for the long answer: Common-law marriage was an old English law, and today only exists in a handful of U.S. states as an elective option. That is, you legally declare yourselves common-law spouses. You are not considered married in the eyes of the court or the government just because you lived together for 5, 10 or even 20 years.

You willingly acknowledge that he was the main breadwinner, he paid off debt and, when he got a job overseas, you made the decision to give up your job in the U.S. and follow him, and allowed him to pay for your living expenses. These choices afforded you a certain lifestyle, and you did not have the career, or the savings, you would have had otherwise.

The Moneyist: My mother’s will says her boyfriend can live in her home after she dies. Can I still kick him out if the deed is transferred to me?

A few years ago, a couple split after 23 years together in Rhode Island. Angela wanted to the court to declare her union with Kevin a common-law marriage so she would inherit part of his home. In a Providence County Family Court judgment, the judge agreed based on evidence in letters and how they presented themselves to family and friends.

Despite being included in family portraits and Kevin’s sister even addressing them as Mr. and Mrs. in a Christmas card, and Kevin wearing a ring on his wedding finger, the Supreme Court of Rhode Island in 2018 overturned the lower court’s decision. Kevin did not consider them married, and nor did the Supreme Court, even though they were together for two decades.

The Moneyist:My husband and I are worth $3.7 million, but I’m afraid I’ll spend my way into the poor house if he dies. When I was single, I bounced checks. What can I do?

This is a good time to evaluate your relationship with yourself, and your priorities in life. What do you want to be remembered for? What do you enjoy doing? And could you turn that into a career? What contribution to society would you like to make? There are no certainties in life — as 2020 has shown. Your retirement, career and financial plans should ideally exist outside of your relationship.

You are not entitled to your boyfriend’s money, even though you share some of the same bank accounts. That’s a gift rather than an entitlement. You are entitled to a big, rewarding and unpredictable life where you are the driver of your own destiny. You are entitled to use your talents, interests and skills to help others. You can reclaim the word, and your career along with it.

You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com

Hello there, MarketWatchers. Check outthe Moneyist private Facebook
FB,
-2.88%

group where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.



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AstraZeneca vaccine ‘most likely’ to roll out in the U.K. early next year


U.K. health secretary Matt Hancock on Monday said a COVID-19 vaccine would “most likely” be available in the first few months of 2021, as the country recorded a sharp rise in daily coronavirus cases.

Speaking on national news radio station LBC, Hancock said the government has already started production of the U.K. government’s initial order of 30 million doses of its coronavirus vaccine, which is being developed by pharmaceutical giant AstraZeneca
AZN,
-1.07%

in collaboration with the University of Oxford.

“We have got 30 million doses already contracted with AstraZeneca, in fact they are starting to manufacture those doses already, ahead of approval, so that should approval come through — and it’s still not certain but it is looking up — should that approval come through, then we are ready to roll out,” Hancock told LBC.

“The best-case scenario is that happens this year. I think more likely is the early part of next year — in the first few months of next year is the most likely,” he added.

U.S. President Donald Trump is reportedly considering plans to fast-track approval of AstraZeneca’s vaccine in a bid to make it available to Americans before November’s election.

The vaccine hasn’t been approved for use and is still undergoing late-stage clinical trials in the U.K., Brazil and South Africa.

Read:AstraZeneca coronavirus vaccine heads to late-stage study

Hancock’s comments come after the U.K. recorded a surge in the number of people testing positive for coronavirus. On Sunday, a further 2,988 cases of coronavirus were reported in the country, the highest number reported on a single day since May 22, and a rise of 1,175 on Saturday, according to the U.K. government’s coronavirus dashboard.

Two deaths were recorded within 28 days of a positive COVID-19 test in the previous 24 hours, taking the total to 41,551, the government said.

The rise in cases prompted Professor Gabriel Scally, a former National Health Service regional director of public health for the south west, to tell the Guardian that the government had “lost control of the virus.

Hancock on Monday denied the government was losing control, but said that this weekend’s rise in cases was “concerning.” He urged younger people to adhere to social distancing measures, saying that under-25s, particularly those aged 17 to 21, accounted for a large number of positive cases.

The spike in cases comes as people are returning to work and school, and as universities prepare to reopen.

“It is concerning because we have seen a rise in cases in France, in Spain, in some other countries across Europe — nobody wants to see a second wave here,” Hancock told LBC.

“It just reinforces the point that people must follow the social distancing rules, they are so important,” he said, adding, “But we’ve also bought vaccine ahead of it getting approved from a whole different series of international vaccines as well.”

Read:U.K. strikes two COVID-19 vaccine deals for 90 million doses

In August, the U.K. announced that it will buy 90 million doses of potential COVID-19 vaccines from Johnson & Johnson
JNJ,
-0.64%

and U.S. drug developer Novavax
NVAX,
-9.75%
.

Some people with coronavirus are being asked to travel hundreds of miles to get tested, according to the BBC.

Labour’s shadow health secretary, Jonathan Ashworth, on Sunday tweeted that the increase in COVID cases is “deeply worrying” and demanded Hancock give a statement to the House of Commons to explain the increase in cases and why some people are still being told to drive hundreds of miles to have a test.





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Some COVID-19 patients suffer lung and heart damage, but there’s encouraging news for these ‘long haulers’


Up until she fell ill with COVID-19, Yvonne Cassidy, a New York-based novelist, said she thought there were only three types of COVID: “The mild version, the version that put you in hospital and the version that killed you. I didn’t know there were others like me, stuck on a post-COVID plateau, not sick anymore, but not better either.”

Two months after being diagnosed with coronavirus, she found it difficult to even walk one block. “It turned out we were a group who had a name: We were COVID long-haulers. The Mayo Clinic and medical journals had published pieces about us,” she said. “We had support groups on social media. We even had a hashtag. We were frustrated and afraid.”

“With my doctor’s guidance I introduced a very slow five-minute jog into my already slow walking schedule. The first time I did it, my chest burned and I doubled over, hands on knees, gasping for breath,” Cassidy, who had toyed with training for a marathon, wrote in an essay for MarketWatch. And today? “The goal isn’t 26 miles. Today’s goal was 30 minutes.”

Cassidy was fortunate. Some younger COVID-19 patients who were otherwise healthy have had blood clots and strokes. Many “long-haulers” — COVID-19 patients who have continued showing symptoms for months after the initial infection — report neurological problems including confusion, difficulty concentrating, heart and lung issues, fatigue, insomnia, plus loss of taste and/or smell.

“There is evidence now that the virus can directly attack heart muscle cells, and there’s also evidence that the cytokine storm that the virus triggers in the body not only damages the lungs, but can damage the heart,” according to John Swartzberg, a clinical professor emeritus of infectious diseases and vaccinology in the the UC Berkeley-UCSF Joint Medical Program.

“One thing we didn’t anticipate was that the virus seems to accelerate a great deal of scarring in the lungs,” he said in an interview with the university. “What we really fear is long-term shortness of breath that could extend anywhere from being very mild to severely limiting.” He found it “disturbing” that one report of CT scans of asymptomatic patients were left with some scar tissue.

Some of these symptoms can persist for months, according to the Mayo Clinic. “The virus can damage the lungs, heart and brain, which increases the risk of long-term health problems.” Most people recover completely within a few weeks, “but some people — even those who had mild versions of the disease — continue to experience symptoms after their initial recovery,” it added.

“Older people and people with many serious medical conditions are the most likely to experience lingering COVID-19 symptoms,” the clinic added. “Although COVID-19 is seen as a disease that primarily affects the lungs, it can damage many other organs as well. This organ damage may increase the risk of long-term health problems.”

Also see:Johns Hopkins scientists examining weird side effects of COVID-19 suggest one way coronavirus ‘gains a foothold in the body’

Yvonne Cassidy: ‘My chest burned and I doubled over, hands on knees, gasping for breath.’

Although COVID-19 patients can suffer long-term lung and heart damage, there is some good news for these long haulers. There’s more evidence that such aftereffects improve over time, according to a paper by a team of researchers presented at the European Respiratory Society International Congress, which studied patients in a COVID-19 “hot spot” in the Tyrolean region of Austria.

Some 86 patients out of a sample of 150 people were scheduled to return for evaluation 6, 12 and 24 weeks after their discharge from hospital. During these visits, clinical examinations, laboratory tests, arterial blood analysis of oxygen and carbon dioxide, lung function tests, computed tomography scans and echocardiograms (on the heart’s chambers and valves) were carried out.

At the time of their first visit, more than half of the patients had at least one persistent symptom, predominantly breathlessness and coughing, and computer tomography or CT scans showed lung damage in 88% of patients. However, by week 12 after discharge, symptoms improved and lung damage was reduced to 56%.


‘The good news is that the impairment tends to ameliorate over time, which suggests the lungs have a mechanism for repairing themselves.’


— Sabina Sahanic, a clinical Ph.D student at the University Clinic in Innsbruck, Austria

“The bad news is that people show lung impairment from COVID-19 weeks after discharge; the good news is that the impairment tends to ameliorate over time, which suggests the lungs have a mechanism for repairing themselves,” said Sabina Sahanic, a clinical Ph.D student at the University Clinic in Innsbruck and part of the team that carried out the study.

The average age of the 86 patients was 61 and 65% of them were male. Unlike Cassidy, nearly half of them were current or former smokers and 65% of hospitalized COVID-19 patients were overweight or obese. Eighteen (21%) had been in an intensive care unitÜ, 16 (19%) underwent invasive mechanical ventilation, and the average length of stay in hospital was 13 days.

The CT scans indicated that overall lung damage decreased from week 6 to week 12. Damage from inflammation and fluid in the lungs caused by COVID-19 was present in 74 patients (88%) at 6 weeks and 48 patients (56%) at 12 weeks. “We did not observe any severe coronavirus-associated heart dysfunction in the post-acute phase,” Sahanic said.

“The findings from this study show the importance of implementing structured follow-up care for patients with severe COVID-19 infection,” she added. “Importantly, CT unveiled lung damage in this patient group that was not identified by lung function tests. Knowing how patients have been affected long-term by the coronavirus might enable symptoms and lung damage to be treated much earlier.”

COVID-19 patients can suffer long-term lung and heart damage but, but there is some good news for these long haulers. (Photo: Getty Images)

This study is also supported by an article for primary-care physicians that was published last month in the British Medical Journal. It said that around 10% of patients who have tested positive for SARS-CoV-2 remain unwell beyond three weeks, and a smaller proportion for months. This was based on a study in which people log their ongoing symptoms on a smartphone app.

This percentage, however, is lower than that cited in many published observational studies. A recent U.S. study found that only 65% of people had returned to their previous level of health 14 to 21 days after a positive test, which has been the case with people who like Yvonne Cassidy who no longer have the virus, but have the antibodies.

Dr. Dixie Harris, a pulmonologist at the Intermountain Healthcare hospital system in Utah, told MarketWatch that coronavirus long haulers suffer shortness of breath, fatigue, memory issues, and even depression, but she too said there is “improvement over time.” She added, “Things such as prolonged symptoms — fatigue, that kind of thing — [have] been reported in MERS and SARS.”

In a second presentation to the European Respiratory Society International Congress on Monday, Yara Al Chikhanie, a Ph.D student at the Dieulefit Santé clinic for pulmonary rehabilitation and the Hp2 Lab at the Grenoble Alps University, France, said that the sooner COVID-19 patients started a pulmonary rehabilitation program after coming off ventilators, the better and faster their recovery.

She studied 19 patients who had spent an average of 3 weeks in intensive care and 2 weeks in a pulmonary ward before being transferred to the Dieulefit Santé clinic. The lack of physical movement in addition to severe infection and inflammation, lead to severe muscle loss, she said. The muscles for breathing are also affected. Most were unable to walk when they arrived at the clinic.

They underwent a test to see how far they could walk in six minutes. At the beginning, they were only able to walk barely a fifth of that distance on average, but after three weeks of pulmonary rehabilitation, this increased to an average of 43%. That is obviously still far from normal, but supervised rehabilitation helped to increase their lung capacity.


‘The sooner rehabilitation started and the longer it lasted, the faster and better was the improvement in patients’ walking and breathing capacities and muscle gain.’


— Yara Al Chikhanie, Ph.D student at Dieulefit Santé, a clinic for pulmonary rehabilitation

“The sooner rehabilitation started and the longer it lasted, the faster and better was the improvement in patients’ walking and breathing capacities and muscle gain,” Al Chikhanie said. “Patients who started rehabilitation in the week after coming off their ventilators progressed faster than those who were admitted after 2 weeks.”

COVID-19 has now killed at least 890,064 people worldwide, and 189,114 in the U.S., Johns Hopkins University says. As of Labor Day, the U.S. still has the world’s highest number of COVID-19 cases (6,292,206). Worldwide, there have been at least 27,208,206 confirmed cases, which mostly does not account for asymptomatic cases.

AstraZeneca
AZN,
-1.07%

, in combination with Oxford University; BioNTech SE
BNTX,
-1.19%

and partner Pfizer
PFE,
-0.11%

; Johnson & Johnson
JNJ,
-0.64%

; Merck & Co.
MERK,
-3.84%

; Moderna
MRNA,
-3.45%

; and Sanofi
SAN,
+5.09%

with GlaxoSmithKline
GSK,
-1.38%

are among those currently working toward COVID-19 vaccines.

The Dow Jones Industrial Index
DJIA,
-0.56%
,
the S&P 500
SPX,
-0.81%

and the Nasdaq Composite
COMP,
-1.26%

ended lower Friday. Doubts about traction for further fiscal stimulus from Washington may be one factor discouraging investors who have been betting on Republicans and Democrats striking a deal to offer additional relief to consumers and businesses.

India has reported 4,204,613 COVID-19 cases, surpassing Brazil (with 4,137,521) as the country with the second highest number of coronavirus cases in the world behind the U.S. India has a rate of COVID-related death per 100,000 people of 5.3 and a case-fatality rate of 1.7%. In contrast, the U.S. has a fatality rate of 57.7 per 100,000 people and a case-fatality rate of 3%.

‘The sooner rehabilitation started and the longer it lasted, the faster and better was the improvement in patients’ walking and breathing capacities and muscle gain.’ (Photo: AFP via Getty Images)




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