Raphael Stevens

Disagreements over Covid restrictions, child vaccination and even the very existence of the virus have seen some relationships pushed to breaking point, according to family law experts and psychologists.
New York City divorce lawyer Lisa Beth Older said many of the disagreements she had seen lately have been specifically about Covid, with children a particular flashpoint.
U.K.-based Consultant Clinical Psychologist Alex Desatnik told CNBC that, “fractures, difficulties, conflicts — high-level conflicts — and relational stress … in couples is phenomenally high.”

A couple wearing face masks cry for a Covid-19 victim in Argentina.
SOPA Images | LightRocket | Getty Images

The Covid-19 pandemic has taken an immense emotional toll on humankind, with people around the world dealing with the tragic loss of loved ones and heightened everyday pressures that have come from living, working and schooling from home.
While many families have enjoyed spending more time together during the pandemic, there are some relationships that have failed to thrive during a period of unprecedented upheavals and uncertainties.

From arguments over Covid rules and restrictions to disagreements over whether children should be vaccinated — and even disputes between families and friends over the very existence of the virus — have seen relationships pushed to breaking point during the pandemic, according to family law experts and psychologists.
“Marital conflicts have definitely been on the rise since the pandemic. I have noticed a rise in the number of clients seeking a divorce. I get three to four inquiries a day for my services, whereas prior to Covid the inquiries were much less,” New York City divorce lawyer Lisa Beth Older told CNBC.
She attributed the increase in divorce inquiries to couples having to work from home and spend more time together, with underlying conflicts and marital issues then harder to overlook.
However, Older, who has been practicing matrimonial law in New York for over 30 years, also noted that many of the disagreements she has seen lately have been specifically about Covid, with children a particular flashpoint.
“The most common conflict I see is where the custodial parents have different outlooks on Covid and how it affects their children,” she said.

“[For example,] anti-vaccination spouses involved in a divorce or custody dispute do not believe Covid exists, or do not agree that Covid poses a threat to the children, and so they believe that the children should be allowed to travel on airplanes, use public transportation, and go mask-less. The vaccinated spouse prefers that the child not travel or incur unnecessary public exposure to risks,” she said.

A couple with protective masks walk on a street amid a new surge of Covid-19 cases as the Omicron variant spreads on December 28, 2021, in Buenos Aires, Argentina.
Ricardo Ceppi | Getty Images News | Getty Images

One common issue that arises, Older said, is whether children should be homeschooled or attend public school, while “another argument is whether or not the children will be vaccinated or not,” although she noted that vaccine mandates for children in New York who want to do extracurricular activities had led some parents to relent over vaccine hesitancy.
“Most of the parents have bowed under the pressure and allowed their children to be vaccinated, some begrudgingly,” she said.
It’s well-known that the divorce rate has increased during the pandemic — the U.K.’s largest family law firm reported a 95% increase in divorce inquiries during the pandemic (with women driving the surge in interest). While in the U.S., Legal Templates, which sells legal forms written by licensed attorneys, reported a 34% increase in sales of its divorce agreement in the first half of 2020 (when lockdown kicked in), compared to the same time period in 2019.
The picture of divorce might be more nuanced than it first appears, however, with one study suggesting that both marriages and divorces actually fell across five U.S. states in 2020.

Wrangling over children

Children can become a particular source of conflict and anguish in a break-up. Having to continue parenting with someone once a relationship is over is often difficult, but Covid has made it harder for some parents, particularly if they have differing opinions over the virus.
Ron Kauffman, a Board-certified marital and family attorney based in Miami, told CNBC he has also seen “a sharp increase in disputes between parents arguing during the pandemic.”
The disputes often fall into three categories, Kauffman said: “Appropriate quarantine, following mask mandates, and vaccinations.” And they manifest in arguments about timesharing or visitation; i.e. the amount of time each parent spends with their child or children, he added. “When parents are separating or already separated, Covid has become a nuclear bomb to frustrate someone’s timesharing.”

Joe Klamar | AFP | Getty Images

“Covid has made timesharing especially difficult for parents who live in another state or country, who have already traveled to see their children … but are denied that opportunity after they arrive,” Kauffman added, noting that there are cases when Covid has been “weaponized to deny timesharing by a ‘gatekeeping’ parent'” that have ended up in court.

Covid denial

Like many important issues, public health measures as a result of the pandemic have split opinion. For example, some people have followed every piece of government guidance and diktat on the virus to the letter, while others have ignored rules and restrictions such as mask mandates and limits on social gathering, and have gone about their lives largely as before.
When it comes to Covid vaccines, millions have accepted the shots, which are proven to be effective, willingly, but there are still significant parts of some populations where hesitancy, skepticism and refusal are common.
And while the majority of people accept the existence of Covid — a virus that’s origins are still unknown but has to date killed over 5.5 million people and caused over 342 million infections globally — recognizing the destruction and disruption it has caused around the world, a small but active minority deny that Covid is real and believe it to be a conspiracy.

U.K.-based Consultant Clinical Psychologist Alex Desatnik told CNBC that, aside from divorces, “fractures, difficulties, conflicts — high-level conflicts — and relational stress which we’re seeing in couples is phenomenally high.”
He said the rise in breakups during the pandemic is not only due to differences in world views between couples, noting that couples or families can have differing political views and stick together. He also stressed that Covid had denied many people the social contact that would have enabled them to air their views with friends and family, and for these to be challenged.
“All of these outlets were taken away,” Desatnik said. “In the midst of a lockdown, when one person is saying it’s all a great hoax, and the other thinks it’s one of the biggest health challenges humanity has ever faced, you have to discuss it.”
Family law specialists say “Covid denial” within a family unit can be one of the hardest relationship challenges to overcome.
“I have had a client where the spouse has been a Covid denier and that obviously puts a real strain on the relationship,” Sara Barnes, a family law solicitor in the U.K. and director at EJ Coombs Solicitors, said, adding that the issue had led her client to seek advice about a possible divorce.
“I suspect that the vaccination issue for their children once they are old enough” will also be an area for conflict, she told CNBC.

Vaccine disputes

Covid vaccines are proven to reduce severe illness, hospitalization and death from the virus, but children have been far less adversely affected by Covid than adults, although they are seen as conduits for the virus. This has led to ethical questions over whether they need to be vaccinated, or boosted, as much as adults.
The World Health Organization has weighed up the clinical data and noted in November that “as children and adolescents tend to have milder disease compared to adults, unless they are in a group at higher risk of severe Covid-19, it is less urgent to vaccinate them than older people, those with chronic health conditions and health workers.” But it also stressed that there are benefits of vaccinating children and adolescents “that go beyond the direct health benefits.”
It noted that “vaccination that decreases Covid transmission in this age group may reduce transmission from children and adolescents to older adults, and may help reduce the need for mitigation measures in schools.”
With the argument for vaccinating children arguably a more complex one than for adults, it’s perhaps not surprising that the issue of Covid vaccines for children has been another area of conflict for some parents.

A woman holds a sign as various activist groups hold a rally at the Huntington Beach Pier to speak out against COVID-19 vaccine mandates for school children and workers that may be mandated by State legislature in the coming year, amid the coronavirus disease (COVID-19) pandemic, in Huntington Beach, California, U.S., January 3, 2022.
Mike Blake | Reuters

Ron Kauffman said he has seen a few cases of disputes between “anti-vax and pro-vax parents.” He insisted that conflict resolution between parents that does not involve the court system is possible and preferable.
“I have spoken to parents who have varying opinions about the severity of Covid, the usefulness of masks, and the necessity for vaccinations. These cases can work themselves out amicably,” he said.
“When parents are sincere in their medical concerns, they can be addressed by following then-existing government guidelines in the place where timesharing will take place,” he said, as well as consulting with the children’s pediatrician and immunologist for advice.

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Many Pacific Island countries have had no new cases of the virus for months — and some have remained virtually Covid-free throughout the pandemic.
Maintaining a long-term state of zero Covid infections has largely been achieved by closing the islands off to all non-essential international travel.
Andrew Preston, a professor of microbial pathogenesis at the University of Bath, told CNBC zero-Covid strategies were unsustainable due to the emergence of the omicron variant.

People wearing face masks at a supermarket in Suva, Fiji, April 23, 2021.
Xinhua News Agency | Getty Images

Countries all over the world have seen Covid-19 cases surge since the emergence of the highly transmissible omicron variant, with new infections soaring by 20% globally over the past week.
In the Pacific Islands, however, it’s been a different story.

Many of the small island states nestled in the Pacific Ocean have had no new cases of the virus for months — and some of those countries have remained virtually Covid-free throughout the pandemic.
As of Tuesday, Tonga, Samoa, Wallis and Futuna, Kiribati, the Marshall Islands, Micronesia, Vanuatu and the Cook Islands had no active cases of the virus, according to figures from Our World in Data.
Maintaining a long-term state of zero Covid infections has largely been achieved by closing the islands off to all non-essential international travel and implementing strict quarantine measures to control the spread of the few cases that have been imported.
Although many of the islands’ borders are still closed, some have tentatively begun to reopen. Those countries that remain isolated now find themselves in a precarious position as they attempt to balance public health with the recovery of their tourism-reliant economies.

Zero Covid a ‘non-starter’ as a long-term policy

Andrew Preston, a professor of microbial pathogenesis at the University of Bath in the U.K., told CNBC that zero-Covid strategies were unsustainable, partially due to the emergence of omicron.

“The scenario under which zero Covid had the greatest credibility was maintaining it while very high levels of immunity were built with vaccination,” he said. “However, for most countries, it has proved very difficult to get a level of vaccination high enough to prevent any spread of an imported case, and now with the ability of omicron to reinfect and infect those vaccinated it appears to be a non-starter as a long-term policy.”
Zero-Covid strategies have also taken a huge economic toll on many of the islands, putting pressure on governments to ramp up vaccination so that borders can be reopened safely.

CNBC Health & Science

According to an IMF report published in October, GDP across the Pacific Islands contracted by 3.7% in 2020, with tourism-dependent countries — Fiji, Palau, Samoa, Tonga and Vanuatu — expected to have seen a 6.5% decline in real GDP in 2021.
The Cook Islands, which has political ties to New Zealand, currently has no cases of the virus. Its Covid response strategy is linked to the situation in New Zealand, where 80 new cases were recorded on Monday.
Some restrictions are in place, including limits of 100 people at social gatherings and the enforcement of social distancing in restaurants and bars. Face coverings are encouraged but not mandated.
Last week, the Cook Islands took steps to reopen its borders. All incoming visitors must travel via New Zealand, where they are required to spend 10 full days before departing for the Cook Islands. Visitors must also provide evidence of Covid vaccination as well as a negative PCR test.

In a statement on Dec. 16, Cook Islands Prime Minister Mark Brown said the “best weapons” the country had had throughout the pandemic had been “isolation and closed borders, and now mass vaccination.”
“We have worked very, very hard in the last two years to maintain our Covid-free status, and these [travel] regulations and our continual drive to get all our eligible people vaccinated, is a continuation of that,” he added.
According to official data, 96% percent of the eligible population — those over the age of 12 — in the Cook Islands has been fully vaccinated against Covid. Around 70% of the population has received a booster dose.
By reopening to the world, the Cook Islands government will be hoping to recoup some of the substantial economic losses the country has suffered because of the pandemic. The Asian Development Bank estimates that the Cook Islands’ GDP loss through the crisis could be as heavy as 32%.

‘Dire’ Covid prospects

For other Pacific Island countries, borders remain closed as authorities work to catch up with the Cook Islands’ vaccination success. Reopening too soon could be a huge public health risk, given that populations likely have little or no immunity acquired through infection — particularly to the omicron variant.
Samoa and Tonga have fully vaccinated around 60% of their populations, according to Our World in Data, while just over half of people living in Wallis and Futuna have received two doses. Meanwhile, in Kiribati, roughly one-third of the population is fully vaccinated.
In some Pacific Island countries, wider health considerations also add to the risk. In Samoa, for example, Covid poses a significant risk to much of the population due to high rates of non-communicable diseases that the WHO says account for approximately 68% of the country’s premature deaths.
Berlin Kafoa, director of the public health division at the Pacific Community, told CNBC there was “huge concern” over the potential for severe Covid epidemics as Pacific Island countries reopen their borders.
“The consequences are dire, as Covid-19 outbreaks will overwhelm fragile health systems if [these countries] are not assisted now,” he said in an email, adding that the WHO and other U.N. agencies were working with Pacific Island governments to prepare each country.

Individual countries and territories across the region are currently working to set vaccination targets at which they feel they can safely reopen their borders. However, Kafoa said that all Pacific Island countries faced challenges in terms of accessing Covid vaccines, vaccine hesitancy and misinformation.  
Official data from Vanuatu — which has kept cases near or at zero throughout the pandemic — shows just 37% of the population has been fully vaccinated.
Being heavily reliant on tourism means the rate of Vanuatu’s economic recovery is pinned on being able to safely reopen its borders. Tourism accounted for 31.7% of national GDP in 2018, a 2020 report from the U.N. said. The industry was responsible for more than one-third of jobs nationwide prior to the pandemic.
Olivier Ponti, vice president of insights at travel analysis firm ForwardKeys, told CNBC that as of Jan 8., first-quarter international bookings to the Pacific Islands stood at 12% of pre-pandemic levels.
French Polynesia, which reopened last May, was seeing the strongest recovery, Ponti said, with bookings to the country currently at 75% of the levels seen the same time two years ago.
Flights to Fiji and New Caledonia were up to 51% and 38% respectively of the levels seen in Jan. 2020. Vanuatu, meanwhile, “is not expecting any international visitors,” Ponti said.

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CNBC’s Jim Cramer on Thursday reviewed the recent slate of major bank earnings.
The “Mad Money” host doubled down on his charitable trust’s ownership of Morgan Stanley and Wells Fargo.
“All banks are not created equal,” he said.

CNBC’s Jim Cramer on Thursday reviewed the recent slate of major bank earnings and explained why his charitable investment trust is sticking with its ownership of Morgan Stanley and Wells Fargo.
“The banks are all over the place this earnings season, which just goes to show the importance of individual stock picking,” the “Mad Money” host said. “All banks are not created equal,” he added, even though he expects 2022 to be a solid year for the financials overall because of likely interest rate hikes by the Federal Reserve.

Citigroup

When Citigroup reported Friday, it indicated an 18% year-over-year increase in operating expenses. That was disappointing to Wall Street, Cramer said, because the firm’s revenues only increased by 1%.
Cramer said the best thing he can say about Citi’s stock is that its cheap, trading at roughly 80% of its tangible book value. However, he acknowledged that the stock, which is down nearly 5% in the past week, may see a lift this quarter when Citi resumes share repurchases; the bank paused its buyback program in December due to regulatory issues.

JPMorgan

Investors also were disappointed by JPMorgan’s jump in noninterest expenses, which rose 11% year over year, Cramer said. While it’s no secret JPMorgan is investing in its business to fend off fintech competition, Cramer said the Street was a bit surprised by the magnitude of the capital commitment.
Cramer said he thinks the sharp sell-off in JPMorgan’s stock post-earnings has been a bit overblown. “After this decline, JPMorgan trades at just 13 times earnings, although it’s the most expensive in the group on [a book value basis]. I think you can do better,” he said.

Wells Fargo

Owned by Cramer’s charitable trust, Wells Fargo beat analyst expectations on the top and bottom lines. “Most important, Wells is very sensitive to interest rates, so when you see bond yields surging, think Wells Fargo,” said Cramer, adding that the bank’s turnaround under CEO Charlie Scharf is “finally paying off.”

Goldman Sachs

Cramer repeated his positive outlook on Goldman Sachs, explaining he believes the investment banking giant can follow up its record 2021 with another strong performance this year. “Goldman’s one of the best franchises on earth but it sells for less than 9 times earnings for heaven’s sake,” he said.
He said the only reason his charitable trust doesn’t own Goldman Sachs is because it already owns Morgan Stanley. “I’m a big believer in diversification — don’t need to have two investment banks in your portfolio,” he said.

Morgan Stanley

Cramer said he was very impressed by Morgan Stanley’s quarterly numbers Wednesday, noting that revenue and per-share earnings topped the Street’s expectations. Its investment banking unit, as well as wealth management, are performing well, Cramer said, and expenses are remaining under control.
“Oh, and they’re aggressively buying back stock. What’s not to like?” Cramer asked rhetorically.

Bank of America

Cramer said Bank of America, which also reported Wednesday, delivered solid numbers, including the fact that revenue growth of 10% outpaced expense growth of 6%.
“Like Wells Fargo, Bank of America is highly sensitive to interest rates, which means it’s in a great position for 2022,” Cramer said, adding that the sole reason his charitable trust does not own Bank of America is because he likes Wells Fargo better.
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CNBC’s Jim Cramer said Thursday he believes the stock market is getting closer to an investable bottom after a challenging start to the new year.
However, the “Mad Money” host said the market’s steep turnaround late in Thursday’s session “inspired a lot of terror.”
That signals the market “still has some work to do” before reaching a trough, Cramer said.

CNBC’s Jim Cramer said Thursday he believes the stock market is getting closer to reaching an investable bottom after a challenging start to the new year.
The “Mad Money” host’s comments mark a shift in outlook compared to two weeks ago, when Cramer contended it was too early to buy aggressively based on a 10-item checklist he uses to determine when stocks are bottoming.

“Considering that we’ve now got many boxes checked, it means that something we didn’t have two weeks ago, we now have,” Cramer said. However, he said the market’s steep turnaround late in Thursday’s session “inspired a lot of terror” and signals the market “still has some work to do” before reaching a trough.
For example, Cramer said he’s now seeing a “sickening level of negativity” on Wall Street, pointing to the American Association of Individual Investors’ sentiment survey that shows nearly 47% of members hold a bearish outlook. That’s up from roughly 38% a week ago.
“This is an astounding level of negativity,” said Cramer, who added that he also is observing analyst downgrades on a range of companies from AMD to Ford Motor. Two weeks ago, he said analysts had yet to throw in the towel.
Another sign a bottom is forming is companies that report strong earnings are showing an ability to swim against the bearish tide, Cramer said. Procter & Gamble serves as one example, he said.
To be sure, Cramer said the picture is too opaque to check some boxes on his list, including whether cash on the sidelines is ready to come in and buy the dip. Even so, he stressed he’s “feeling a little more confident” about stocks than he was two weeks earlier.

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Shares of Peloton closed down 23.9% at $24.22 on Thursday, wiping roughly $2.5 billion off of its market value.
The sharp drop brought the stock beneath the $29 mark where it first priced at in September of 2019, and marked another notable milestone in the company’s turbulent ride in recent months.
Shares plummeted after CNBC reported that the connected fitness company is temporarily halting production of its products, and were halted for volatility multiple times.

Shares of Peloton closed down 23.9% at $24.22 on Thursday, wiping roughly $2.5 billion off of its market value.
The sharp drop brought the stock beneath the $29 mark where it first priced at in September of 2019, and marked another notable milestone in the company’s turbulent ride in recent months.

Shares plummeted after CNBC reported that the connected fitness company is temporarily halting production of its products, and were halted for volatility multiple times.
After the market closed, Peloton then issued a press release that said its fiscal second-quarter revenue would be within its previously forecasted range. However, it said that the quarter ended Dec. 31 would add fewer connected fitness subscribers than it had been projecting. Peloton shares turned positive in extended trading, on this announcement.
“As we discussed last quarter, we are taking significant corrective actions to improve our profitability outlook and optimize our costs across the company,” said Chief Executive John Foley, in a statement.
Peloton went public more than two years ago with an initial market capitalization of $8.1 billion. The stock briefly traded below the $29 threshold following its public debut. Around mid-March of 2020, near the onset of the pandemic, Peloton shares were hovering around $23, as the broader market was tumbling amid the uncertainty of the coronavirus.

A monitor displays Peloton Interactive Inc. signage during the company’s initial public offering (IPO) across from the Nasdaq MarketSite in New York, U.S., on Thursday, Sept. 26, 2019.
Michael Nagle | Bloomberg | Getty Images

But as investors began to view Peloton as the ultimate stay-at-home stock, shares went on a massive rally. The stock hit an all-time intraday high of $171.09 on Jan. 14 of last year, as Peloton was reporting triple-digit revenue growth and seeing record-low levels of churn among users. At that point, it fetched a market cap of almost $50 billion.

Investor concerns started to trickle in, however, as Peloton’s massive growth was coupled with supply chain constraints. Customers that had shelled out thousands of dollars for a Bike or one of Peloton’s treadmill machines were reporting delivery delays, and Peloton was forced to invest in order to beef up its manufacturing capacity.
Then, news of a child dying from an accident associated with Peloton’s pricier Tread+ treadmill machine last March spooked both investors and consumers. At first, Peloton resisted calls for the company to recall its treadmill machines. As additional injuries were reported, though, Peloton issued a voluntary recall of both its Tread and Tread+ products last May. Shares were trading below $100 at this point.
In recent months, Peloton has seen the pace of its revenue growth slow, and it isn’t adding as many new users per quarter as it was a year earlier. Some of this could be expected, as the pandemic spurred extraordinary consumer demand for Peloton’s fitness products when gyms were temporarily shut and people wanted to work out at home. Now, though, consumers have a litany of at-home fitness options to choose from: Tonal, Hydrow, Mirror, Tempo and Clmbr, to name a few. They can also opt to go back to a gym or a boutique fitness class.

After reporting three consecutive quarters of net income, Peloton booked a loss in the three-month period ended March 31, and its losses have mounted in the quarters since.
Peloton has said it doesn’t expect to be profitable – before interest, taxes, depreciation and amortization – until fiscal 2023.
CNBC reported on Tuesday that Peloton is now working with consulting firm McKinsey & Co. to look for opportunities to cut costs, which could include layoffs and store closures.
At the end of this month, it will also start to tack on shipping and setup fees for its Bike and Tread products, in part because of historic inflation. The price of its Bike will go to $1,745 from $1,495. Its less costly treadmill will rise to $2,845 from $2,495. The Bike+ will remain $2,495, according to Peloton’s website.
Peloton had just slashed the price of its Bike last August by about 20% to $1,495, saying it hoped to give consumers a more affordable option.
JMP Securities analyst Andrew Boone said in a note to clients that the looming price hikes could bring in as much as an additional $150 million in revenue and gross profit in fiscal 2023. It could also encourage future customers to purchase Peloton’s more expensive Bike+, he said, which isn’t being impacted by the price hikes and could now be viewed as a more reasonable option.
But the extra fees could also hurt demand and push consumers to shop elsewhere.
Peloton is banking on product innovation and international expansion to help fuel future growth. It will soon start selling a strength product called Peloton Guide in a bundle with its heart-rate armband for $495. The hope is that existing users will become repeat customers when they purchase accessories, such as Peloton’s dumbbells or cycling shoes, as well as apparel.
After rising more then 440% in 2020, Peloton shares dropped 76% in 2021.

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It’s that time again! “Mad Money” host Jim Cramer rings the lightning round bell, which means he’s giving his answers to callers’ stock questions at rapid speed.

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NextEra Energy: “NextEra is the fastest growing utility. I think it’s terrific, and I actually would be a buyer here tomorrow morning.”

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Spero Therapeutics: “This is the height of speculation. It doesn’t make any money at all. You literally are hoping that another drug company will buy that company. That’s what must happen.”

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Moderna: “If we’re near the end of Covid, then Moderna needs to continue to go down a little more, and Pfizer represents a better buy.”

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On Holding: “I think there are too many shoe companies. I thought that was one of them. I didn’t like Allbirds, I didn’t like On. I just don’t like these kinds of companies. They are too expensive, and they don’t make any money. I mean come on, you’ve got to make money here.”

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Sanofi: “We’ve had [CEO Paul Hudson] on a bunch of times. I feel the same way, 3.7% yield, it’s fine. … It’s good.”

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Lincoln Electric: “That’s a really good company. Lincoln is a very, very good company. There we go: A company that makes things, builds things, sells them for a profit. Yes. Hallelujah.”

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AMN Healthcare Services: “[CEO] Susan Salka is terrific. The stock has come down a lot. Sells at only 13 times earnings. I say you have to nibble right here. Right here. I like it.”

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23andMe: “It’s a SPAC. Look, I think 23and Me, I think GlaxoSmithKline should go buy them. But if they don’t buy them, it will go lower still.”
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Peloton said its fiscal second-quarter revenue will be within its previously forecasted range, as it takes actions to slash costs and improve profitability.
However, the company added fewer subscribers in the latest period than it had expected.
CEO John Foley said the company is focused on “identifying reductions in our operating expenses as we build a more focused Peloton moving forward.”

John Foley, co-founder and chief executive officer of Peloton Interactive Inc., stands for a photograph during the company’s initial public offering (IPO) in front of the Nasdaq MarketSite in New York, U.S., on Thursday, Sept. 26, 2019.
Michael Nagle | Bloomberg | Getty Images

Peloton said Thursday that its fiscal second-quarter revenue will be within its previously forecasted range, as it takes actions to slash costs and improve profitability. 
However, the company added fewer subscribers in the latest period, which ended Dec. 31, than it had expected.

In a press release preannouncing its financial results, Peloton said it projects it will end the quarter with 2.77 million connected fitness subscribers, versus a forecasted range of 2.8 million to 2.85 million. Connected fitness subscribers are people who own a Peloton product and also pay a monthly fee to access the company’s digital workout content. 
Average net monthly churn for the quarter is expected to be 0.79%. That’s lower than the 0.82% it reported in the first quarter and slightly above the 0.76% it saw in the year-ago period. The lower the churn rate, the less turnover Peloton is seeing with its user base.
It said it sees total second-quarter revenue of $1.14 billion, which is within the guidance of $1.1 billion to $1.2 billion that it previously provided.
And Peloton said adjusted losses — before interest, taxes, depreciation and amortization — will be in a range of $270 million to $260 million, versus prior guidance for a loss of $350 million to $325 million.
The company’s announcement on Thursday evening follow a CNBC report that the connected fitness maker is temporarily halting production of its products.

Peloton shares were rising 2.5% in after-hours trading, after closing the day down 23.9%, at $24.22. About $2.5 billion was wiped from Peloton’s market cap on Thursday, as the stock fell below a $29 IPO price.
“As we discussed last quarter, we are taking significant corrective actions to improve our profitability outlook and optimize our costs across the company,” said Chief Executive Officer John Foley, in a statement. “This includes gross margin improvements, moving to a more variable cost structure, and identifying reductions in our operating expenses as we build a more focused Peloton moving forward.”
Foley added that Peloton will have more to share when it reports its fiscal second-quarter earnings on Feb. 8.
On Tuesday, CNBC reported that Peloton is now working with consulting firm McKinsey & Co. to look for opportunities to cut costs, which could include layoffs and store closures.
At the end of this month, it will also start to tack on shipping and setup fees for its Bike and Tread products, in part because of historic inflation. The price of its Bike will go to $1,745 from $1,495. Its less costly treadmill will rise to $2,845 from $2,495. The Bike+ will remain $2,495, according to Peloton’s website.
Baird analyst Jonathan Komp said in a note to clients that after chasing growth for years, Peloton has developed “a bloated corporate expense waistline.” He estimates that Peloton has added potentially $500 million to $600 million of annual spending on stores and employees that could be targeted and cut out of the business.
“We suspect there are significant opportunities to re-evaluate the workforce … amid more moderate post-Covid, near-term consumer demand expectations,” said Komp.
Baird said that the right cost-cutting measures could help the company return to profitability sooner than expected.
Peloton has said it doesn’t expect to be profitable – before interest, taxes, depreciation and amortization – until fiscal 2023.
Find the full press release from Peloton here.

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Peloton is temporarily halting production of its connected fitness products as consumer demand wanes and the company looks to control costs, according to internal documents obtained by CNBC.
The company said in a confidential presentation dated Jan. 10 that demand for its connected fitness equipment has faced a “significant reduction” around the world due to shoppers’ price sensitivity and amplified competitor activity.
Peloton plans to report fiscal second-quarter results on Feb. 8 after the market closes.

Peloton is temporarily halting production of its connected fitness products as consumer demand wanes and the company looks to control costs, according to internal documents obtained by CNBC.
Peloton plans to pause Bike production for two months, from February to March, the documents show. It already halted production of its more expensive Bike+ in December and will do so until June. It won’t manufacture its Tread treadmill machine for six weeks, beginning next month. And it doesn’t anticipate producing any Tread+ machines in fiscal 2022, according to the documents. Peloton had previously halted Tread+ production after a safety recall last year.

The company said in a confidential presentation dated Jan. 10 that demand for its connected fitness equipment has faced a “significant reduction” around the world due to shoppers’ price sensitivity and amplified competitor activity.
Peloton has essentially guessed wrong about how many people would be buying its products, after so much demand was pulled forward during the coronavirus pandemic. It’s now left with thousands of cycles and treadmills sitting in warehouses or on cargo ships, and it needs to reset its inventory levels.
The planned production halt comes as close to $40 billion has been shaved off of Peloton’s market cap over the past year. Its market value hit a high of nearly $50 billion last January.
Peloton shares closed Thursday down 23.9% at $24.22, bringing the stock’s market value to $7.9 billion. During trading, shares hit a 52-week low of $23.25. The drop also brought the stock below $29, where it was priced ahead of Peloton’s initial public offering.

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The company’s presentation shows Peloton had initially set expectations on Oct. 31 for demand and deliveries in its fiscal third quarter and fourth quarter that ended up being far too high. It reevaluated those forecasts on Dec. 14, according to the presentation, and Peloton’s expectations dropped significantly for its Bike, Bike+ and Tread.

However, Peloton said, the latest forecast doesn’t take into account any impact to demand the company might see when it begins to charge customers an extra $250 in delivery and setup fees for its Bike, and another $350 for its Tread, beginning at the end of this month.
Peloton also said it has seen low email capture rates for the upcoming debut of its $495 strength training product, Peloton Guide, which is codenamed “Project Tiger” in internal documents viewed by CNBC. Email capture rates keep track of the number of people who enter their email addresses on Peloton’s website to receive information on the product. The company said this is a signal of “a more challenging post-Covid demand environment.”
The official launch of Guide in the U.S. was pushed from last October to next month and now could come as late as April, the presentation dated earlier this month said. The company also said it initially planned to charge $595 for the bundle that includes one of Peloton’s heart rate arm bands and later dropped the price by $100.
Late Thursday, Chief Executive Officer John Foley said in a statement, “As we discussed last quarter, we are taking significant corrective actions to improve our profitability outlook and optimize our costs across the company. This includes gross margin improvements, moving to a more variable cost structure, and identifying reductions in our operating expenses as we build a more focused Peloton moving forward.”
Foley added that Peloton will have more to share when it reports its fiscal second-quarter results on Feb. 8 after the market closes.

Too much supply as spending flatlines

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In recent months, though, gyms have reopened and consumers don’t appear to be throwing as much money into at-home fitness equipment. At the end of its latest quarter, Peloton counted 2.49 million connected fitness subscribers. It only added about 161,000 net new members in the period ended Sept. 30, its lowest growth in two years.
The reversal is seen in its stock price. Pelton shares rallied more than 440% in 2020, but dropped 76% in 2021.
In a separate internal Peloton presentation dated October 2021, which was obtained by CNBC, Peloton said that it was expecting overall fitness spending would continue to grow year over year, but instead overall spending was flat following the summer months.
Analysts in recent weeks have been trimming their expectations for Peloton’s second quarter as well as their price targets for the stock, projecting that Peloton had a weak holiday.

Peloton’s market share could be falling

One bright spot the presentation noted was that Peloton’s share of the total connected fitness market had been increasing.
But a report from research firm M Science shows that Peloton’s overall market share might be on the decline. In November, Peloton’s share of all connected fitness products priced at a minimum of $1,400 was tracking slightly below levels observed in 2019 and 2020, M Science said. That’s despite the lift Peloton saw on key holiday shopping days including Black Friday and Cyber Monday, it said.
M Science pegs Peloton’s share of the market for products priced at more than $1,400 at a little more than 65%, making it the leading player. Other at-home fitness products that M Science tracks include Echelon, Hydrow, Lululemon’s Mirror, NordicTrack and Tonal.
M Science also said that it didn’t yet see “any evidence of another wave of at-home fitness demand as a result of recent Covid-19 developments.”
CNBC reported on Tuesday that Peloton is working with consulting firm McKinsey & Co. to look for ways to slash costs, which could entail job cuts and store closures. A person familiar with the matter said Peloton has already started layoffs in its sales division. The person requested anonymity because they weren’t authorized to speak for the company.

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