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SAN ANTONIO — Ford Motor’s new F-150 Lightning is an electric pickup truck. That may seem obvious given it looks like a truck and has electric motors and a battery pack instead of an engine, but it needs to be said.
Why? Because a successful battery-powered pickup is a critical step in the EV transition, for Ford and the industry at large.

While industry leader Tesla has proven consumers will purchase electric cars and Rivian Automotive has shown there’s demand for electric lifestyle vehicles, the F-150 is the most significant test thus far as to whether EVs can move from compliance vehicles and niche trucks to a product that will entice more mainstream buyers.
The electric pickup market, though still largely unproven, is going to be important for investors to watch in the coming years. Trucks traditionally have fat profit margins and account for about 20% of vehicles sold in the U.S., according to auto intelligence firm Edmunds.
LMC Automotive expects the U.S. electric pickup market to increase from about 25,000 vehicles this year to 1 million or so by 2030. There are anticipated to be five electric pickup models available on the market this year, and that’s expected to jump to 21 over the next decade.
Ford’s F-150 Lightning is the first traditional pickup truck to go electric. It’s not a GMC Hummer EV “supertruck.” It’s not a Tesla “Cybertruck.” It’s not a Rivian R1T “adventure vehicle.” It’s a pickup truck, electrified.
The benefits of the F-150 Lightning are similar to the Hummer EV and Rivian R1T, but these electric pickups — the only ones being sold currently in the U.S. — are not created equal. The three drive differently, and will appeal to different buyers once sales move past early adopters into more general, EV-curious buyers.

F-150 Lightning

The Lightning lives up to the F-150 name in both function and form, acting as a bridge between the traditional pickup people know and a new EV. It shares many of its design and parts with its traditional sibling, aside from the powertrains, some design tweaks and an optional 15.5-inch control screen.
It’s also priced like a traditional pickup, ranging from about $40,000 to more than $90,000. That’s similar to Ford’s current lineup of large four-door pickups and in line with average prices of about $61,000 for a full-size pickup, according to Cox Automotive.
An electric pickup for the masses is something Ford was in a unique position to bring to market. Its F-Series lineup, including the F-150, has been the best-selling vehicle in America for 40 years and the top truck for 45 years.
The company set out to make an electric version of the F-150 pickup truck, and it succeeded. The vehicle operates as a full-size truck. But the electrification brings added benefits of essentially instantaneous torque, increased storage through a massive front trunk, or “frunk,” where an engine would traditionally be — and it removes the burden of having to fill up on gas.
The Lightning drives like an F-150 should, and that’s not a bad thing. Ford and other automakers have increasingly transformed pickups from harsh-riding work trucks to comfortable vehicles capable of navigating smoothly on and off road.

The vehicle’s large battery provides for an even better ride, as it keeps the vehicle more grounded and provides a closer 50-50 weight ratio for better balance. On top of that, it provides an even towing experience because EVs don’t require transmission gear changes, which are especially noticeable when towing cargo.
While the Lightning is capable of scaling hills or even a little rough terrain, it doesn’t match up to the Hummer or R1T in that regard — but that’s by design. This is a truck meant for mainstream buyers, not a niche segment. Ford at some point may offer such a hardier vehicle, but this isn’t it.
The F-150 Lightning is capable of up to 580 horsepower and 775 foot-pounds of torque. Consumer models with its top-end 131-kWh battery start at about $72,500 and have a range of up to 320 miles on a single charge. Its towing capacity is up to 10,000 pounds —between that of the Hummer and R1T. Vehicles with smaller batteries and a range of 230 miles are less expensive but also offer less performance.

Electric Ford F-150 Lightning
Andrew Evers / CNBC

One of the Lightning’s most unique advantages over the Hummer and R1T is its capabilities for on-board power generation. Ford loaded the vehicle with outlets and a bi-directional charging system that can power a work site or a home in the event of a blackout for up to 10 days, depending on energy usage.
Ford started shipping the F-150 Lightning earlier this month for select fleet buyers and more than 200,000 reservation holders. The company has not announced when it will reopen its order bank, as it plans to ramp up production to 150,000 vehicles by mid-2023.

R1T

The Rivian R1T has a bit of first-mover advantage in the electric pickup market; production began last fall but is ramping up slowly. The R1T is capable in both performance and off-roading, going 0-60 mph in about three seconds like a sports car, but it can scale rocks or large hills like a Jeep SUV.
Its interior and exterior styling, with vegan leather and real wood, are more Tesla-like chic than off-road brute. It’s also a much smaller vehicle — about 16 inches shorter, in fact — than the F-150 Lightning, making it more comparable to a Ford Ranger or Jeep Gladiator.

That speaks to how Rivian is positioning its products as “adventure vehicles.” It’s how Jeep has described its SUVs for years, making Rivian more of a threat to the Stellantis SUV brand than the F-150.
For now, Rivian CEO RJ Scaringe agrees, telling CNBC during a recent interview that the three pickups are each “pretty different products.” Cross-shopping between the Rivian R1T, the Hummer and the F-150, he said, are extremely low: “Clearly the objective and goals are different.”
Edmunds reports shoppers looking at the R1T most often comparison shop the Ford Mustang Mach-E crossover and other EVs, rather than other pickups.
However, Scaringe has alluded to plans for a full lineup of vehicles at Rivian, which theoretically could include a larger truck.

Rivian R1T electric pickup truck
Source: Rivian

Starting pricing for the R1T ranges from $67,500 to $85,000. Vehicles currently available have up to 314 miles of range on a single charge with a 128.9-kWh “large” battery. Performance versions with four motors combine to produce 835 horsepower and 908 foot-pounds of torque. The vehicle can tow up to 11,000 pounds — an important metric for many pickup owners.

Hummer

There’s a reason GM resurrected Hummer, a brand infamously popular in the 1990s and 2000s for its excessive, gas-guzzling vehicles. Whether you loved Hummers or hated them, you knew them. That means GM had brand awareness baked in as long as the new EV stayed true to form for the brand, and it does.
The Hummer EV pickup looks like a modernized version of its descendants. It’s large, flamboyant and extremely capable.
Instead of guzzling gas, it drains lots of energy. The electric Hummer is reportedly the least efficient electric truck of the three at 47 MPGe, an electric vehicle range equivalent for miles per gallon. That compares to 70 MPGe for both the R1T and F-150 Lightning. But again, it’s Hummer, so what did you expect?

The Hummer’s off-road capability also stands out compared with the other two pickups, which helps explain its lower efficiency and more than 9,000-pound weight.
This Hummer can scale rock climbs with ease, while also proving a smooth on-road experience and exceptional hands-free highway driving with GM’s Super Cruise system. It also features removal roof panels that can fit into the vehicle’s frunk and many other special and hidden features, including a “crab walk” mode and faster charging than the other trucks.
GM threw everything it had and more into the Hummer in terms of off-road and performance parts. Its $110,000 starting price is a testament to that, ahead of lower-priced variants expected in the years ahead that could start at $79,995.

GMC Hummer EV Edition 1
Michael Wayland / CNBC

The current top-end Hummer, despite its weight, can achieve 0-60 mph in about three seconds with its “Watts to Freedom,” or “WTF” mode. It’s capable of up to 1,000 horsepower and 1,200 foot-pounds of motor torque. Its range on a single charge is up to 329 miles with a 212.7-kWh battery pack (of which 205 is usable, GM says). It can tow up to 7,500 pounds, the lowest lift of the three electric pickups.
Unlike with the Rivian pickup, Edmunds reports some notable cross-shopping between the electric Hummer and its less rugged competitors. Buyers interested in the Hummer look at the R1T and the Lightning for comparison more than any other models.
That crossover, though, still only represents about 9% of those truck seekers.

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As countries across Asia reopen to international travelers, Japan — one of the continent’s most popular destinations — remains firmly closed.
That may soon change. Prime Minister Fumio Kishida announced Thursday at a news conference in London that Japan will ease border controls in June.

Locals often celebrate the easing of pandemic-related border restrictions, but some in Japan say they are fine keeping the measures in place.
Even before the pandemic, many locals preferred to travel within the country, with domestic tourism totaling $21.9 trillion yen ($167 billion) in 2019, according to government-backed Japan Tourism Agency.
Although Japanese people are currently allowed to travel abroad, many “don’t want to go overseas” and choose to “travel inside the country” instead, said Dai Miyamoto, the founder of travel agency Japan Localized.
Izumi Mikami, senior executive director at Japan Space Systems, visited Kyushu Island and Okinawa Island, two tourist hot spots before the pandemic. He said he felt safer with fewer tourists around.
Some people are taking the opportunity to be outdoors after spending much time at home.

Shogo Morishige, a university student, took multiple ski trips to the Nagano — the prefecture that hosted the 1998 Winter Olympic Games — and said it was “surprisingly crowded” with locals.
“Everyone similar to us had not traveled for a long time … Right now, it’s almost as if [Covid-19] isn’t really here,” said Morishige. “I don’t think anyone’s too scared of it anymore.”
Others ventured to new destinations.
“After moving to Yamagata prefecture, I started going to places I would not normally go, such as ski resorts … hot springs in the mountains and aquariums and sandy beaches,” said Shion Ichikawa, a risk management employee at internet firm, Line.

Tours are changing

International travelers to Japan fell from nearly 32 million in 2019 to just 250,000 in 2021, according to the Japan National Tourism Organization.
With a clientele of nearly all locals, some tour companies redesigned their tours to conform to local interests.
Japanese travelers steered away from visiting big cities and are opting for outdoor experiences that they can “discover by foot,” said Miyamoto. So Japan Localized — which catered its tours to English-speaking foreigners before the pandemic — collaborated with local tour company Mai Mai Kyoto and Mai Mai Tokyo to provide walking tours in Japanese.
People across Japan are also spending time at camping sites and onsen — or hot spring — spas, said Lee Xian Jie, chief developer at tour company Craft Tabby.
“Campsites have become very popular,” he said. “Caravan rentals and outdoor gear sales have been doing very well because people are going outdoors a lot more.”
Luxury onsens popular with younger people “are doing quite well,” but traditional onsens are suffering as the elderly are “quite scared of Covid” and do not go out much, Lee said.

Craft Tabby used to operate walking and cycling tours in Kyoto, but transitioned online when the pandemic hit. As countries reopen their borders, “online tours have not been doing well” and participation has “dropped to almost zero,” Lee said.
Tourists’ appetites are changing and people are looking for “niche” activities in “rural areas where it isn’t so densely populated,” he said.
Lee now lives south of Kyoto in a village called Ryujinmura and is planning to operate tours in the rural town once tourists are back.
“We need to think of tours and activities up here where people can explore new stuff,” he added.

‘Over-tourism’

Japan welcomed nearly 32 million international visitors in 2019 — up from just 6.8 million just ten years prior, according to Japan Tourism Agency.
The rapid increase in tourists caused major draws, such as the culturally rich city of Kyoto, to struggle with over-tourism.

Residents in Kyoto are now saying that “silence is back,” said Miyamoto, who recounted instances where foreign tourists spoke loudly and were discourteous to locals.
Similarly, Lee said that “a lot of people who were quite upset about over-tourism in Kyoto” are now saying “it feels like how Kyoto was 20 years ago — the good old Kyoto.”
But that may be coming to an end.

Is Japan ready to move on?

Prime Minister Kishida’s announcement may not be welcome news for portions of the Japanese population.
More than 65% of respondents in a recent survey conducted by the Japanese broadcasting station NHK said they agreed with the border measures or believed they should be strengthened, according to The New York Times.
Local reports indicate international travelers may need multiple Covid-19 tests and a packaged tour booking to enter, though JNTO told CNBC that they have yet to receive word on this. Still, this may not be enough to pacify some residents.
Foreign visitor spending contributes less than 5% to Japan’s overall gross domestic product, so “it is not necessarily surprising for the government to make decisions prioritizing” other industries, said Shintaro Okuno, partner and chairman of Bain & Company Japan, referring to why the country had stayed closed.

Women wearing kimonos tie “omikuji” fortune strips outside the Yasaka Shrine during Golden Week holidays in Kyoto, Japan, on Tuesday, May, 3, 2022.
Kosuke Okahara | Bloomberg | Getty Images

The recent decision is likely to be most unpopular with Japan’s elderly citizens, said Ichikawa. Nearly 1 in 3 are over 65 years old, making Japan home to the largest percentage of elderly people in the world, according to the research organization PRB.
“The elderly tend to be more prejudiced than younger people that Covid-19 is brought in by foreigners,” said Ichikawa. “It is understandable that in Japan — a country of elderly people — politicians must tighten the borders to protect them physically and psychologically.”
When the pandemic was at its peak, Japanese were even wary of people from other parts of Japan visiting their hometowns.
“I saw signboards at public parks and tourist attractions saying ‘no cars from outside Wakayama,'” said Lee. “People were quite fearful of others from outside the prefecture.”
However, residents living in cities may feel differently.
“Japan is too strict and conservative” in controlling Covid-19, said Mikami, who is based in Tokyo.
Miyako Komai, a teacher who lives Tokyo, said she is ready to move on.
“We need to invite more foreign people” so Japan’s economy can recover, she said. “I don’t agree that we want measures to be strengthened … We need to start living a normal life.” More

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In an interview Tuesday with CNBC’s Jim Cramer, Upstart Holdings CEO David Girouard sought to downplay investor concerns about the company’s risk exposure.
Shares of the artificial intelligence lending platform plunged 56.42% Tuesday, closing at $33.61 apiece.
“All else being equal, I prefer [if] our stock was going up. But the fundamentals of our business has not changed,” Girouard told Cramer.

In an interview Tuesday with CNBC’s Jim Cramer, Upstart Holdings CEO David Girouard sought to downplay investor concerns about the increased loan balance held on the financial technology firm’s balance sheet at the end of its first quarter.
Shares of the artificial intelligence lending platform plunged 56.42% Tuesday, closing at $33.61 apiece, one day after it also lowered its full-year outlook for revenue and adjusted EBITDA margin. Upstart cited rising interest rates and broader economic uncertainty for the revised forecasts, which came in lighter than Wall Street’s expectations. Upstart’s loan balance also was in focus Tuesday.

“Just to make it really clear, in the first quarter, a single-digit percentage of the loans that were originated on our platform came to our balance sheet,” Girouard said in an interview “Mad Money.” “That hasn’t changed in our history.”
On Monday, Upstart reported that it held $604.4 million worth of loans on its balance sheet, as of March 31, up from $260.8 million in the fourth quarter of 2021. Some analysts noted that increase raises Upstart’s credit risk exposure, and Cramer told Girouard he was “shocked” by the figure.
“We’ve said we use putting loans on our balance sheet to test new products and new models, and that’s largely what those represented,” Girouard said.
Upstart has recently been expanding into the auto loan market, while also working to roll out a small-dollar loan product.
“It’s not a change in our model,” Girouard said, referring to Upstart’s use of its balance sheet to support research and development on new lending products. “More than 90% of our loans are originated and held by banks or originated by banks and sold forward to institutional markets. That hasn’t changed.”

Upstart, which went public in December 2020, soared for much of last year and reached an all-time closing high of $390 per share on Oct. 15. It’s been tough sledding since then, due in part to a broader shift away from high-flying growth companies in response to a more hawkish Federal Reserve. As of Tuesday’s close, Upstart shares are down about 91% from their record closing high.
Multiple Wall Street analysts downgraded Upstart shares on Tuesday. Cramer told Girouard he believes part of Tuesday’s dramatic stock slide because investors realized there was “far more risk” than they previously understood.
“All else being equal, I prefer [if] our stock was going up. But the fundamentals of our business has not changed,” said Girouard, a former Google executive who also founded Upstart. “Profits and growth have been the combination since we public in December 2020 and since before that. We’re proud of what we’re building.”
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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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Funko Inc: “Many of us were confounded that the stock went down as low as it did.”

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AECOM: “This is a tremendous infrastructure play. … I think you should buy it.”

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Affirm Holdings Inc: “We have to hear if they have some secret weapon. … Let’s learn more when they report [their quarterly earnings].”

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Black Knight Inc: “There are a lot of stocks in the arbitrage world that are getting hit. … These guys are getting hurt.”

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Pfizer’s purchase of Biohaven Pharmaceutical represents a commitment to expand the reach of its calcitonin gene-related peptide (CGRP) franchise, CEO Vlad Coric told CNBC’s Jim Cramer on Tuesday.
“We have to bring the modern day, novel therapies to those patients, and Pfizer really is the best company to build upon our work and unlock the potential of this franchise and bring it to the patients who are still in need,” Coric said in an interview on “Mad Money.”

Pfizer’s purchase of migraine medication maker Biohaven Pharmaceutical represents a commitment to expand the reach of its calcitonin gene-related peptide (CGRP) franchise, CEO Vlad Coric told CNBC’s Jim Cramer on Tuesday.
“There are still over 300,000 physicians in the U.S who write for the older triptans and have not yet written for one oral CGRP,” Coric said in an interview on “Mad Money,” referring to a class of medicine used to treat migraines.

“That’s not acceptable — we have to bring the modern day, novel therapies to those patients, and Pfizer really is the best company to build upon our work and unlock the potential of this franchise and bring it to the patients who are still in need,” he added.
Pfizer and Biohaven announced on Tuesday that the Covid vaccine maker will purchase Biohaven for about $11.6 billion. Pfizer will receive all Biohaven stock it doesn’t already own — the company took a 2.6% stake in Biohaven in November — for $148.50 a share in cash.
Shares of Biohaven, whose main product is migraine pill Nurtec, skyrocketed 68% on Tuesday to $140. Pfizer stock rose 1.75%.
Cramer said that while he believes Biohaven wouldn’t have been able to expand the drug globally on its own, he believes that Pfizer’s help will make its migraine medication one of the “top 10 drugs in the history of the world.”
“I agree, Jim. I think this is going to be one of the most important primary care drugs, and in addition to that is going to change the way migraine is treated and set a new standard of care,” Coric said in response. 

“I’m really looking forward to seeing the team at Pfizer really encourage patients to learn about this and tap into the full potential of CGRP agents,” he added.
Pfizer and Biohaven said they expect to close the acquisition by early 2023.
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WWE is looking to boost its sponsorship revenue as it returns to live events and aims to expand its programming.
The company also has a big streaming rights deal with Hulu that’s set to expire this year.
It might make sense for WWE to broaden its partnership with NBCUniversal’s Peacock, according to a longtime advisor in the media rights industry.

Chief Brand Officer and TV Personality of WWE, Stephanie McMahon delivers her keynote address at the opening of Sports Matters in conjunction with All That Matters 2016 in Singapore on September 14, 2016.
Roslan Rahman | AFP | Getty Images

WWE and industry analysts agree: The pro wrestling and media company can squeeze more revenue out of sponsorship deals.
The company leans on the intellectual property built around performers such as superstar personalities like The Undertaker, John Cena, Dwayne “The Rock” Johnson, Roman Reigns and Bianca Belair. Revenue from its live events, which are returning as Covid restrictions ease, and media offerings are fueled in part by sponsorship dollars. 

WWE this year aims to fill football stadiums and expand its programming, according to Frank Riddick, WWE’s chief financial officer. Riddick, who took over the job in November, said after last week’s earnings release that the company is making sponsorship a priority this year.
In 2021, WWE reported roughly $72 million combined for advertising and sponsorships in its media and live events businesses.
WWE made more than $10 million in sponsorship fees alone for last month’s marquee Wrestlemania 38, executive Stephanie McMahon said last week. That was a record for the two-day event held at AT&T Stadium in Dallas. WWE’s sponsorship partners include Toyota, DoorDash, Rocket Mortgage and Rihanna’s Fenty Beauty cosmetics line, said McMahon, who is also the daughter of longtime CEO Vince McMahon.
Analysts suggest the WWE is undervalued when it comes to sponsorship revenue, estimating the company lures around $35 million per year just from sponsorships. That’s less than combat-sports company UFC, which attracts more than $100 million annually, according to a Guggenheim Partners note to clients last month.
While WWE lags behind UFC in overall popularity, its fans are the most likely to notice sponsors, according to sponsorship consulting firm IEG. Sixty-seven percent of WWE’s fans are more likely to consume brands associated with the company, according to IEG’s research, which used data from polling outfit YouGov. That’s ahead of the 55% average for the group of the 11 biggest sports leagues, including the NFL, which is by far the most popular sports organization in the United States.

“All that does is spell potential and opportunity,” said Peter Laatz, IEG’s global managing director. He said he thinks WWE can clear over $100 million in annual sponsorship revenue.
But he also noted WWE might not be the “right fit for the most affluent categories or top tier brands.”
The WWE did not return a CNBC request to discuss its sponsorships.

WWE’s place in the streaming world

WWE gets most of its revenue from its media business, accounting for $278.1 million of its $333.4 million overall revenue in the quarter ended March 31. Advertising and sponsorship revenue in the media segment grew 27% to $19.8 million from the year-ago period.
The company is preparing for a key media deals amid an “increasingly cluttered streaming marketplace,” WWE President Nick Khan said on last week’s earnings call. Hulu’s deal for day 2 rights around WWE’s weekly “Raw” program expires this year.
Day 2 rights allow subscribers to watch “Raw” and “Smackdown,” another weekly show, 24 hours after they first air. Raw airs live on USA Network, and Smackdown is shown on Fox. After 30 days, subscribers to NBCUniversal’s Peacock service can watch the shows. (In 2021, WWE entered a five-year deal with NBCUniversal for a reported $1 billion to license its library and show live main events on Peacock.)
Khan also suggested a new player could enter the sports streaming game.
“It’s just a matter of time before Netflix goes with live,” said Khan. He added the live events generate the highest consumer impressions for networks and streaming companies.
Netflix is indeed looking to bounce back as its results suffer while viewers shake off pandemic restrictions and head back out into the world. In April, Netflix reported a decline in subscribers and warned of millions of more losses in the months ahead. Co-CEO Ted Sarandos said at the time he doesn’t see a profitable way for the streamer to get into sports, although its “Formula 1: Drive to Survive” series has been a smash hit.
Netflix probably wouldn’t be interested in WWE, anyway, according to longtime media rights advisor Lee Berke, since the wrestling company is already tied up with Peacock. He said it would make more sense for the NBCUniversal service to add more WWE rights.
“That’s a major relationship for them, and there’s a lot they can do to build on that,” said Berke, CEO of LHB Sports, which advises the sports entertainment industry. “But if [Netflix] is going to make a move for WWE, I see them making an aggressive for all of their content or major live events.”
WWE is also looking at overseas expansion, particularly in India, home to a billion people and a growing middle class. WWE estimates its content is shown in more than 180 countries. The company said it drew 25 million viewers for an exclusive event showcasing U.S. WWE wrestlers competing against India-born performers. Wrestlemania drew more than 50 million viewers last month in India.
Khan, the WWE president, called India a “hugely important market.” But, he added, WWE is waiting for networks to finish bidding on rights to cricket – the most popular sport in the country – before the company determines its future media marketplace there.
Disclosure: Peacock owner NBCUniversal is also the parent company of CNBC.

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CNBC’s Jim Cramer on Tuesday stressed the importance of changing market strategies when the market shifts, saying right now the market says to buy beaten-down tech growth names.
“There are lots of tech companies that now return capital to you and are at reasonable prices and are going to have very good growth. They exist again,” the “Mad Money” host said.

CNBC’s Jim Cramer on Tuesday stressed the importance of changing market strategies when the market shifts, saying right now the market says to buy beaten-down tech growth names.
“Many tech companies that make real things and return capital to shareholders now do sell at reasonable prices after the tsunami of selling. … I’m talking about amazing semiconductor and software companies, especially Nasdaq names that are doing so well, including internet names,” the “Mad Money” host said.

“When the facts change, I do change my mind, and right now the facts are a lot less hostile to the beaten-down high-flyers. At least for the moment. … There are lots of tech companies that now return capital to you and are at reasonable prices and are going to have very good growth. They exist again,” he later added.
Stocks had a bumpy path on Tuesday as the major indices teetered between gains and sell-offs. The Dow Jones Industrial Average slipped 0.26%, while the S&P 500 rose 0.25%. The tech-heavy Nasdaq Composite gained 0.98%. 
The 10-year Treasury yield note pulled back below 3%, after reaching the highest level since 2018 a day earlier.
“I don’t know if Treasury yields will actually keep heading lower. .. I do know that the stock market’s gotten over-sold to the point where even a couple days of calmness in the bond market can actually create some nice action in stocks,” Cramer said.
He also stressed the importance of knowing when to change strategies to fit the tide of the market —despite what critics might say.

“I can’t stick to my old views when the data no longer supports them,” Cramer said. “If you want true consistency in this market, you’ve got to take your cue from bonds, and bonds have changed direction,” he added.

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“The nature of turnarounds is they are full of surprises,” Peloton CEO Barry McCarthy told analysts on Tuesday, during his first earnings conference call at the company.
After digging into the business when he joined about three months ago, the CEO said he learned that Peloton was “weaker on everything supply chain” than he had expected.
Shares of Peloton fell to an all-time low Tuesday.

Barry McCarthy, chief financial officer at Spotify, attend annual Allen & Company Sun Valley Conference, July 11, 2018 in Sun Valley, Idaho.
Drew Angerer | Getty Images

When Barry McCarthy showed up to run Peloton about three months ago, he was surprised to learn just how discombobulated the supply chain was and how quickly the company’s cash coffers were shrinking.
“The nature of turnarounds is they are full of surprises,” McCarthy told analysts on Tuesday, during his first post-earnings conference call with Peloton.

After digging into the business, the CEO said he learned that Peloton was “weaker on everything supply chain” than he had expected. He said the biggest surprise during the previous quarter was cash flow, and how bleak it was.
Yet the former Netflix and Spotify executive also said he was surprised by Peloton’s ability to “quickly address” its cash flow situation without diluting existing shareholders and while continuing to adequately capitalize the business. Another bright spot noted by McCarthy was that he found more talent within Peloton’s headquarters than he thought he would discover.
McCarthy’s comments to Wall Street on Tuesday were incredibly high stakes, given Peloton’s diminishing share price and waning confidence among investors that the business can be successful in a post-Covid pandemic world.
The CEO’s letter to shareholders Tuesday came with disappointing results for the three-month period ended March 31 and a grim outlook for the current quarter, which ends on June 30 and marks the finish of Peloton’s fiscal year. McCarthy was quick to call out areas where former Peloton management had not been so successful, while laying the groundwork for his turnaround goals.
At least for now, investors are more focused on the current sour state of things. Peloton shares sunk to an all-time low Tuesday, dragging the company’s market valuation down to about $4 billion. It had been as high as $50 billion near the start of last year.

Still, McCarthy ended the conference call by telling Wall Street that he’s “pretty optimistic” about the company’s path forward, “notwithstanding the stock price.”
“I don’t mean to sound Pollyannaish, but I’m hopeful that someday soon we’re going to look back on this call as one of the important turning points in the business,” he said.

A shift in priorities

On McCarthy’s check list are:

Breaking into third-party retail by selling Peloton products through other businesses
Growing awareness of the company’s digital app, which can be an option for people who don’t want to commit to a Bike or Tread machine
Expanding internationally
Rolling out more widely a pilot test where customers pay a flat rate to rent one of Peloton’s stationary bikes and access its live and on-demand workout classes

“We need to be good at hardware, but being good at hardware is not nearly sufficient,” he said on the call. “And that calls for a shift in the investment priorities of the business.”
He also, importantly, aims to turn the business back to free cash flow positive in its upcoming fiscal year.
A recent cash infusion from JPMorgan and Goldman Sachs should allow it do to this, McCarthy said, in spite of any economic headwinds. According to his letter, Peloton ended its latest quarter “thinly capitalized” with $879 million in unrestricted cash and cash equivalents.
Many investors will likely have pause, though, until they’re able to witness greater signs of progress. Some also worry that Peloton could lose a fraction of its existing subscriber base — which has proven loyal during the pandemic — if they change too much and too soon.
UBS analyst Arpine Kocharyan said he expects Peloton investors are going to be more concerned in the short-term with the company’s ability to preserve its cash flows and liquidity. Peloton’s strategy under McCarthy is to put greater focus on the net present value of the subscriber, versus a prior focus on hardware profits, Kocharyan said in a note to clients.
Other analysts are questioning whether McCarthy’s strategy is really that different from that of Peloton co-founder and former CEO John Foley.
Peloton enjoyed success under Foley, who led the connected fitness equipment maker through the height of the pandemic. But it also experienced challenges as consumer demand started to fade but costs still mounted and Peloton had made investments in things, such as additional manufacturing hubs, that it no longer needed.
“The company continues to suggest with their words that they know they need to turn around,” said BMO Capital Markets analyst Simeon Siegel. “And yet they’re holding onto this notion that their growth story is their North Star.”
“If the company would simply work on selling their existing inventory and focusing on bear hugging their existing loyalists, there should be a reasonable path to profitability,” he added. “The issue is that story gets clouded with the belief that they’re entitled to grow as far and as fast as they want.”
McCarthy reiterated Tuesday that Peloton’s goal is to one day count 100 million members, a goal that Foley laid out in 2020.
“I know of digital apps that already have more than 100 million people that are focused on fitness. And I can’t for the life of me think why, given our success early in the category, that we couldn’t be one of those digital apps,” McCarthy said.
Peloton had 7 million subscribers as of March 31.

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