Plus, Fed Chair Jerome Powell said the central bank is likely to begin tapering before the end of this year, Apple announced App Store updates, and Rivian Automotive confidentially filed to go public.
Stocks were slightly higher at the open on Friday with the Dow adding 18 points, or less than 0.1%. The S&P 500 rose by nearly 0.1%, while the Nasdaq gained more than 0.1%.
Peloton shares are down more than 8.5% at the time of writing after the company said it has been subpoenaed by the Department of Justice and the Department of Homeland Security for documents and other information related to injuries reported by Peloton customers. In a filing out Friday, the fitness equipment maker also said it is being investigated by the SEC for its public disclosures related to those injuries, and said it has been named in several lawsuits associated with May’s Tread and Tread+ recalls following the death of a child in an accident as well as dozens of other reported injuries. Peloton said it intends to cooperate with each of the investigations. “At this time, we are unable to predict the eventual scope, duration or outcome of the investigations,” the company said in the filing.
In more bad news for Peloton, the fitness company posted disappointing fiscal fourth quarter earnings results. The company reported a loss per share of $1.05 on revenue of $936.9 million, versus expectations for a loss per share of $0.45 on revenue of $927.2 million. “The past year represented an inflection point for the connected fitness industry, with significant increases in awareness and demand following the onset of the COVID-19 pandemic,” CEO John Foley wrote in a letter to shareholders. The company’s outlook for the first quarter was disappointing as well with Peloton forecasting sales will reach $800 million, well below the $1.01 billion expected by analysts. “Competition is rising across connected fitness,” BMO Capital Markets analyst Simeon Siegel said. “Peloton discounting the Bike and upping marketing is a clear signal that the cost to acquire customers is rising after being the only player in the market last year.”
Federal Reserve Chairman Jerome Powell said today that the central bank is likely to begin tapering some of its easy-money policies before the end of this year, though interest rate hikes are still a ways off. In his speech as part of the Fed’s annual Jackson Hole summit, Powell said the economy has reached a point in its recovery where it no longer needs as much policy support. Powell said that the “test has been met” for inflation where there “has also been clear progress toward maximum employment,” adding that the FOMC agreed at its July meeting that “it could be appropriate to start reducing the pace of asset purchases this year.” “The timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff, for which we have articulated a different and substantially more stringent test,” Powell said.
Apple announced today that developers have agreed to a series of App Store updates that will resolve a class-action lawsuit against Apple by U.S. developers. As part of the agreement, developers will be able to share purchase options with users outside of their iOS app, expands the price points developers can offer for subscriptions, in-app purchases, and paid apps, and establishes a new fund to assist qualifying U.S. developers. “From the beginning, the App Store has been an economic miracle; it is the safest and most trusted place for users to get apps, and an incredible business opportunity for developers to innovate, thrive, and grow,” Phil Schiller, Apple Fellow who oversees the App Store, said in a press release. “We would like to thank the developers who worked with us to reach these agreements in support of the goals of the App Store and to the benefit of all of our users.”
And Rivian Automotive, an electric vehicle startup backed by Amazon, has confidentially filed paperwork with the SEC to go public. The size and price range for the proposed offering have not yet been determined, and the IPO is expected to take place after the SEC completes its review process. The news comes less than two months after Rivian announced it had closed a $2.5 billion private funding round led by Amazon’s Climate Pledge Fund, D1 Capital Partners, Ford Motor, and funds and accounts advised by T. Rowe Price Associates. Rivian employs roughly 7,000 and is preparing to deliver its R1T pickup truck in September.
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Coty Inc (NYSE: COTY): Coty announced on Thursday that its fiscal fourth quarter revenue rose by 89.6%. “We have ended the year on a high note, with Q4 sales nearly doubling YoY. Sales in the Americas expanded in FY21, and we saw particular strength in the U.S. and China,” CEO Sue Y. Nabi said in the earnings release. “Importantly, with two months into the new FY22 year, I am extremely encouraged by the momentum we are seeing across the business. In the market, we are seeing strong fragrance demand across the U.S. and China, some early signs of recovery in Europe and Travel Retail, and improving cosmetics trends. And we are capitalizing on this more favorable demand backdrop with a line-up of strong launches in each core area of the business.”