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While Marvel Studios has clearly seen greater box-office success in the last decade, industry experts don’t count out DC under the care of James Gunn and Peter Safran.
Changes are coming to both studios, as attendance at cinemas has lagged in the wake of the pandemic and Marvel and DC look to lure back audiences with captivating and innovative storytelling.
While DC looks to find new footing under new leadership, Marvel remains steady under the careful stewardship of Kevin Feige, who looks to reinvigorate audiences with new and diverse characters.

Combo showing Brie Larson in Captain Marvel and Ezra Miller in The Flash.
Courtesy: Marvel (L) | DC Comics (R)

For more than a decade, the narrative surrounding comic book studios Marvel, owned by Disney, and DC, owned by Warner Bros., has been one of a contentious rivalry, with Marvel enjoying the clear edge.
But there’s a plot twist coming.

The release of Marvel’s “Guardians of the Galaxy Vol. 3” on Friday marks the symbolic end of writer and director James Gunn’s time with one comic book studio and the start of his reign at another. And, for once, the success of a Marvel film could bode well for the future of its longtime adversary.
The new film is expected to generate between $120 million and $155 million domestically during its upcoming opening weekend, on par with the 2017 release of “Guardians of the Galaxy: Vol. 2,” which went on to snare $870 million globally, according to data from Comscore.
The success of “Guardians of the Galaxy Vol. 3” would show that Gunn has his finger on the pulse, and has the potential to deliver similar results over at DC Studios, where he was named co-CEO last year.
While Marvel has clearly seen greater box-office success in the last decade, generating $28.7 billion in global ticket sales from 31 feature films since 2008, industry experts don’t count out DC. The DC Extended Universe, which released 12 films since 2013, saw box-office returns of $6.4 billion and built ardent fan bases for writer-director Zack Snyder and live-action versions of characters like Harley Quinn (Margot Robbie).
Changes are coming to both studios, as attendance at cinemas has lagged in the wake of the pandemic and Marvel and DC look to lure back audiences with captivating and innovative storytelling. Their parent companies are also looking to lean more into franchises while cutting spending in other areas of their businesses. And while Marvel has remained under the steady stewardship of Kevin Feige, DC looks to find new footing under new leadership.

“It is not a oppositional relationship,” said Brandon Katz, an industry strategist at Parrot Analytics, of the perceived rivalry between Marvel and DC. “I actually think it’s additive.”

Gunn for hire

Gunn has been one of several creative shepherds for Marvel since “Iron Man” hit theaters and kicked off the Marvel Cinematic Universe in 2008. Gunn’s first film with Marvel, “Guardians of the Galaxy,” saw a ragtag team of intergalactic criminals turn into reluctant heroes.
While some saw the idea of a gun-toting raccoon and a talking tree teaming up in a tent pole Disney film as potentially disastrous, Gunn’s script, packed with comedy and heart, went on to generate $770 million globally in 2014.
The writer-director took a brief hiatus from working with Marvel, after tweets resurfaced in which he made jokes about pedophilia and molestation. During this time, he teamed up with DC to write and direct “The Suicide Squad,” another film about a ragtag group of antiheroes, although this time Gunn tapped into his edgier side and netted an R rating. Eventually, Gunn was rehired by Disney to write and helm “Guardians of the Galaxy: Vol. 3,” which would be his last venture with Marvel Studios.
In November, Gunn and producer Peter Safran, were given the reins for DC Studios and have since developed a 10-year plan to reinvigorate its franchises across TV and film, including fresh spins on Superman and Batman.

Still from Warner Bros.’ “The Suicide Squad.”
Warner Bros.

The duo have worked together previously on projects and bring extensive industry experience to the comic book studio. Gunn, in addition to working at Marvel, has a long career in Hollywood and the indie film world, with screenwriting credits for movies like “Scooby Doo” and Snyder’s “Dawn of the Dead” remake. He also directed subversive genre films like “Slither” and “Super,” and wrote “Tromeo and Juliet” for schlock studio Troma.
Safran began as a talent manager before transitioning into producing, helping to launch The Conjuring Universe, a lucrative franchise of interconnected horror films. He also produced a handful of DC titles including “Aquaman,” “Shazam” and Gunn’s “The Suicide Squad.”
Industry experts see Gunn and Safran as a potential dynamic duo.
“I think between the two of them there is a certain level of experience in those worlds to be able to shepherd a lot of untapped potential in DC,” said Shawn Robbins, chief analyst at BoxOffice.com. “Gunn has shown that he can succeed in both Marvel and DC. That speaks to being able to transcend a brand. It comes down to his understanding of character and his understanding of what the audience is looking for. So, I think there’s reason to be confident.”
DC’s new strategy includes creating a cohesive universe like Marvel’s while still making unique “elsewhere” content, where characters and storylines do not need to be connected to one overarching narrative.
The studio has seen success from these solo ventures with films like 2019’s “Joker” and 2022’s “The Batman” as well as its television content, which airs on The CW and via the streaming service Max.
“The upside of [DC] being a little bit more Wild, Wild West over the last decade is that their shows have kind of run the gamut of tone, genre and style,” said Katz.
This has allowed the studio to provide content for different audiences and demographics.
“‘The Flash’ is as different from ‘Doom Patrol’ which is as different as ‘Harley Quinn,'” he said.
Gunn and Safran will continue that tradition, but with their own stamp on it. Upcoming TV content includes an animated show featuring “Suicide Squad” character Amanda Waller forming a black-ops team of monstrous prisoners, a “True Detective”-style Green Lantern show centered on intergalactic cops John Stewart and Hal Jordan, and a “Game of Thrones”-style show set in Themyscira, home of the Amazons and birthplace of Wonder Woman.
On the theatrical side, DC Studios has announced five new projects that will roll out starting in 2025 with Gunn’s own “Superman: Legacy.” There will also be a new take on Batman, with Damian Wayne, the son of Bruce Wayne, taking on the role of Robin. DC also plans a Supergirl film, another centered on Swamp Thing and one about superhero team, The Authority.

A marvelous run

DC isn’t the only one undergoing a major reinvention. Marvel, which has faced some audience criticism for what it’s released after the much-praised “Avengers: Infinity War” and “Avengers: Endgame” films, is seeking to recoup goodwill from fans and more box-office business.
Disney CEO Bob Iger even questioned if Marvel should continue creating third and fourth films for established legacy characters, rather than exploring new heroes, antiheroes and villains. His comments, which were delivered in March during the Morgan Stanley Technology, Media and Telecom Conference, came on the heels of the disappointing box-office performance of “Ant-Man and the Wasp in Quantumania” and “Thor: Love and Thunder.”
Disney has been releasing new content from the MCU at a somewhat frenetic pace over the past few years. The entertainment giant has used streaming service Disney+ as a vehicle to introduce new characters — Moon Knight, Ms. Marvel, She-Hulk — as well as to more deeply explore legacy characters (Loki, Falcon, the Winter Soldier) between theatrical releases.

Paul Rudd is Scott Lang, aka Ant-Man, alongside Johnathan Majors as Kang the Conqueror in “Ant-Man and the Wasp in Quantumania.”

As the MCU grows, some have rallied behind the franchise, excited for new entrants and content. Others have found the required viewing of additional series to be arduous. It seems Marvel took the hint, pushing its release of “The Marvels” to November from July, allowing space for “Guardians of the Galaxy: Vol. 3” to breathe across the summer movie season.
Still, industry analysts say the recent slump at the box office and critical reception for MCU films isn’t something to worry about. After all, Robbins said, it’s happened before.
In the wake of 2012’s “Avengers,” which shattered theatrical records at the time, fans expressed disappointment in follow-up films “Iron Man 3” and “Thor: The Dark World.” While the third solo Iron Man film tallied $1.2 billion at the global box office, the second Thor feature secured just $644 million, a relatively small sum in comparison to previous Marvel hits.
“They’ve set such a standard for themselves,” Robbins said. “It’s impossible to keep living up to it every single time.”

Of course, the post-“Endgame” landscape was also mired by the pandemic, which shuttered theaters for a time, and led to some Marvel releases going day-and-date with streaming service Disney+ for a fee.
But the $854 million in ticket sales for 2022’s “Black Panther: Wakanda Forever” fly in the face of claims about superhero fatigue. Even the paltry $464 million in receipts for the most recent MCU film “Ant-Man and the Wasp: Quantumania” says more about film quality than a disinterest in the genre, experts say.
“When you deliver something that’s historic, like ‘Infinity War’ and ‘Endgame,’ you are setting up a bar that fans are going to expect you to at least hit or get near with every one of your projects,” said Erik Davis, managing director at Fandango.
Marvel has laid the groundwork in the wake of “Endgame” to establish a new team of Avengers, including Shang-Chi, Ms. Marvel, She-Hulk, Moon Knight and America Chavez, as well as a team of antiheroes in the form of the Thunderbolts.
There is confidence from industry analysts that Marvel will right its ship in the coming years. Katz noted that unexpected heroes – like Gunn’s Guardians of the Galaxy – are the bedrock of the MCU.
“Marvel Studios, out of necessity, cultivated A-list appeal from B-list characters,” he said.

Unsteady ground

Still, the road ahead is anything but smooth for Marvel and DC. Both studios are dealing with major cast-related scandals and a not-yet rebounded theatrical industry. It has also yet to be seen how the current Writers Guild of America strike will affect TV and film production.
While initial social media reviews out of CinemaCon suggest that “The Flash” is a return to form for DC Studios, controversy surrounding star Ezra Miller could complicate the future for the character of Barry Allen and the connected tissue of Gunn and Safran’s new DC Universe.
Last year, Miller admitted they had “gone through a time of intense crisis” and would undergo treatment for “complex mental health issues” in the way of being charged with felony burglary in Stamford, Vermont. While Miller ultimately avoided jail time with a plea deal struck in January, their future at DC remains uncertain.
Early indications from Warner Bros. suggested that the distributor would still send the film to theaters, but future projects with the actor would be paused. It is unclear whether Miller will be able to reestablish enough goodwill with fans and the studio to secure themselves another chance to return.
At Marvel, there are similar issues regarding Jonathan Majors, the actor who has portrayed the MCU’s newest overarching villain Kang. Multiple alleged abuse victims have come forward following the actor’s March arrest in Manhattan for domestic violence.
Majors’ attorney, Priya Chaudhry, has repeatedly defended her client, telling the press that he is “innocent,” “has not abused anyone” and “will be fully exonerated.” Majors is set to appear in court on May 8.
While the character of Kang appeared in the “Loki” series and was an integral part of “Ant-Man and the Wasp: Quantumania,” the expectation is that the villain won’t make a major theatrical return until “Avengers: The Kang Dynasty” and, potentially, “Avengers: Secret Wars,” due out in 2025 and 2026, respectively.
This could allow Marvel time to wait and see how Majors’ legal problems pan out, but sooner or later, the studio will be forced to address the issue. Especially, considering how far in advance these films need to be shot in order for special effects to be added.

Tom Holland and Benedict Cumberbatch star as Peter Parker and Doctor Strange in “Spider-Man: No Way Home.”

There is also the unanswered question about the future of Spider-Man within the Marvel Cinematic Universe. Disney has managed to broker deals in the past with Sony, which owns the rights to the character, to have Spidey appear in MCU films. However, after “Spider-Man: No Way Home,” it’s unclear when Peter Parker played by Tom Holland will return.
“I think Spider-Man is the most popular and the most lucrative character right now on the big screen,” Davis said. “And I think Marvel Studios, sooner rather than later, needs to tell us what’s going on with Spider-Man.”
Davis suggested Disney could be holding out on making any announcements until ComicCon in San Diego this July.

Forging ahead

While there is general optimism from industry experts about the future of both studios, there remains some hesitancy that Gunn will be a silver bullet for DC Studios.
“There is a famous quote by William Goldman in his classic book, ‘Adventures in the Screen Trade.’ The quote is that when it comes to predicting movie success, ‘nobody knows anything,'” Mark Young, a professor at the Marshall School of Business at USC, wrote in an email to CNBC.
“Clearly, Mr. Gunn is extremely talented, but I don’t think we can assume that a success of a movie at another studio will necessarily translate into future success at another,” he said. “Certainly DC is betting that he will be successful and by all accounts he will be.”
Young, who teaches classes on the entertainment industry, said his students have discussed feeling the effects of superhero fatigue in classes. He sees this as the result of predictable plotlines within the genre that are repeated across both studios’ films.

Marvel Studios

With Gunn at the helm of DC, there is promise of a more unique slate of films and television shows. He’s already proven with his Guardians of the Galaxy films (and a holiday special), “The Suicide Squad” and “Peacemaker” that he can freshen up the genre.
“Where Marvel and DC unfortunately find themselves aligned is with a seeming creative malaise that has resulted in a noticeable pushback from fans who are not simply willing to follow every superhero movie into the multiplex,” said Paul Dergarabedian, senior media analyst at Comscore.
“That said, the superhero genre is one that will always have appeal for audiences looking for the among the most epic of big screen experiences and with endless creative possibilities and incredible talent on both the Marvel and DC teams, no one should give up on either of these companies adjust strategies and deliver the creative and financial goods moving forward,” he added.
And even with this malaise, many industry experts told CNBC that the strong track records from Marvel and Gunn bode well for the genre.
“I am not remotely ready to bet against Kevin Feige, who helped engineer the single-most consistently successful creation in Hollywood history,” Katz said. “I think if there’s ever someone to to leave this next phase of DC it’s a unique, singular voice like James Gunn, who just spent the better part of a decade learning under Kevin Feige.”
Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal owns a stake in Fandango. More

Johnson & Johnson’s consumer-health spinoff Kenvue started trading on the New York Stock Exchange under the stock ticker KVUE.
Thursday’s move values the new company at roughly $50 billion.
Kenvue’s debut is the biggest U.S. IPO since EV maker Rivian went public in 2021.

Shares of Johnson & Johnson’s consumer-health spinoff Kenvue jumped 22% Thursday after its market debut on the New York Stock Exchange, making it the biggest U.S. IPO in more than a year. 
The new company’s shares closed at $26.90 after opening at $25.53. Kenvue originally priced its initial public offering at $22 Wednesday night, toward the high end of its target range.

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Thursday’s move values the company at roughly $50 billion.
Kenvue sold 172.8 million shares in the offering, raising $3.8 billion and putting the company at a valuation of roughly $41 billion. The company initially planned to sell 151 million shares.
The company, which trades under the ticker KVUE, holds a wealth of widely known consumer brands such as Band-Aid, Tylenol, Listerine, Neutrogena, Aveeno and J&J’s namesake baby powder. 
“Millions of consumers around the world this morning wake up with a Kenvue product in their home,” CEO Thibaut Mongon, told CNBC’s “Squawk on the Street” Thursday morning ahead of the stock’s debut.
Mongon previously served as J&J’s executive vice president and worldwide chair of consumer health. He will sit on Kenvue’s board.

Thibaut Mongon, CEO of Kenvue Inc. a Johnson & Johnson’s consumer-health business, rings the opening bell to celebrate it’s IPO at the New York Stock Exchange (NYSE) in New York City, U.S., May 4, 2023. 
Brendan Mcdermid | Reuters

Kenvue’s IPO marks the largest restructuring move in J&J’s 135-year history. 
J&J first announced the spinoff in November 2021 as an effort to streamline operations and refocus on its faster-growing medical devices and pharmaceutical divisions. 
But the company will generally be able to control the direction of Kenvue’s business and matters that shareholders vote on for the time being: The health giant will own 1.7 billion shares of Kenvue’s common stock after the IPO completes, representing a 90.9% stake. J&J will reduce the rest of its stake in Kenvue later this year. 
Mongon told CNBC that J&J has been “very clear” about its intent to separate from Kenvue this calendar year.
Kenvue expects to pay a quarterly cash dividend of about 20 cents per share starting with the third quarter, which ends Oct. 1. Mongon called it an “attractive dividend policy that will be a way for us to produce more value back to shareholders.”

Thibaut Mongon, CEO and Paul Ruh CFO of Kenvue Inc. a Johnson & Johnson’s consumer-health business, pose together during the company’s IPO at the New York Stock Exchange (NYSE) in New York City, U.S., May 4, 2023.
Brendan McDermid | Reuters

Meanwhile, the consumer-focused Kenvue is already profitable. The spinoff posted $14.95 billion in sales for 2022 and a net income of $1.46 billion on a pro forma basis, according to a preliminary prospectus filed with the Securities and Exchange Commission last week.
“We do this from a position of strength. Kenvue is a healthy business,” Mongon told CNBC.
For the first quarter, which ended April 2, Kenvue estimates it raked in sales of $3.85 billion and net income of around $330 million. Those results are preliminary.
It expects annual sales growth through 2025 to be about 3% to 4% globally, according to the filing.  
The IPO still leaves J&J liable for thousands of allegations that its talc baby powder and other talc products caused cancer. Those products fall under the company’s consumer-health business, now Kenvue, but the spinoff will assume only talc-related liabilities that arise outside the U.S. and Canada, according to its IPO filing from January.
When asked about the liabilities, Mongon said Kenvue is “laser-focused on what we do best: serving our customers and also our portfolio with the brands that we mentioned.” 
The debut raises hopes that the muted U.S. market for initial public offerings could be recovering after it collapsed last year. 
Kenvue’s IPO raised more than every other offering so far this year, according to a report from Renaissance Capital. The 40 IPOs in 2023 have only raised a combined $2.4 billion. 
The spinoff is also the largest IPO since the electric vehicle maker Rivian went public in November 2021. More

The attorneys general of New York and California said they had opened an investigation into the workplace practices and culture of the National Football League.
The AGs said they had issued subpoenas in connection with the probe.
“The joint investigation will examine the workplace culture of the NFL and allegations made by former employees, including potential violations of federal and state pay equity laws and anti-discrimination laws,” a press release issued by the AGs said.

NFL Commissioner Roger Goodell speaks during a press conference in advance of Super Bowl LVII at Phoenix Convention Center on February 08, 2023 in Phoenix, Arizona.
Peter Casey | Getty Images Sport | Getty Images

The attorneys general of New York and California said Thursday they had opened an investigation into the workplace practices and culture of the National Football League, including claims of gender discrimination.
The AGs have issued subpoenas to the NFL in connection with the probe.

“The joint investigation will examine the workplace culture of the NFL and allegations made by former employees, including potential violations of federal and state pay equity laws and anti-discrimination laws,” a press release issued by the AGs said.

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New York AG Letitia James said, “No person should ever have to endure harassment, discrimination, or abuse in the workplace. No matter how powerful or influential, no institution is above the law, and we will ensure the NFL is held accountable.”
The NFL has more than 1,000 employees in offices in New York and California, the AGs noted.
Thursday’s press release cited a February 2022 New York Times article that detailed how more than 30 women who previously worked for the NFL claimed they suffered gender discrimination and retaliation after filing complaints with the league’s human resources office.
Also last year, a congressional committee found that for decades the workplace of the Washington Commanders team owned by Dan Snyder had tolerated “sexual harassment, bullying, and other toxic conduct.”

California AG Rob Bonta said Thursday that the AGs have “serious concerns about the NFL’s role in creating an extremely hostile and detrimental work environment.”
“No company is too big or popular to avoid being held responsible for their actions,” Bonta said.
In a statement, the NFL said the “allegations are entirely inconsistent with the NFL’s values and practices.”
“The NFL offices are places where employees of all genders, races and backgrounds thrive. We do not tolerate discrimination in any form,” the league said. “The NFL is committed to ensuring all employees of the league are respected, treated fairly, and have equitable pay and access to developmental opportunities. Our policies are intended not only to comply with all applicable laws but to foster a workplace free from harassment, intimidation and discrimination.”
This is breaking news. Check back for updates. More

Darden Restaurants believes fine-dining restaurants’ sales growth will outpace that of casual-dining eateries through 2026.
The Olive Garden parent is betting on upscale restaurants with its $715 million acquisition of Ruth’s Chris Steak House.
Darden Restaurants executives said high-income diners aren’t pulling back on spending at The Capital Grille and Eddie V’s, its existing fine-dining brands.

A Ruth’s Chris Steak House in Miami, May 3, 2023.
Joe Raedle | Getty Images News | Getty Images

Olive Garden owner Darden Restaurants is betting on fine dining with its $715 million acquisition of Ruth’s Chris Steak House.
The company’s announcement on Wednesday that it’s adding another fine-dining restaurant to its portfolio surprised some. TD Cowen analyst Andrew Charles wrote in a note to clients he was expecting the company to target another casual-dining chain, such as First Watch Restaurant Group.

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But Darden executives made it clear that the deal is because of their conviction in the high-end segment.
Fine-dining restaurants’ sales growth is expected to outpace that of casual-dining eateries through 2026, Darden CEO Rick Cardenas told investors Thursday on a conference call to discuss the deal. Upscale restaurants also have “significantly higher” margins, he added.
Even as Wall Street and economists worry about a potential recession this year, Darden said high-income diners aren’t pulling back on spending at The Capital Grille and Eddie V’s, the company’s existing fine-dining chains.
“As we have seen in our fine-dining brands, consumers with income levels above $150,000 continue to dine out and maintain or increase their spending at casual or fine-dining restaurants,” Cardenas said.
The average check at Ruth’s Chris is $97, according to Darden’s investor presentation. For comparison, the average check at Olive Garden, which accounts for roughly half of Darden’s revenue, was $21 in fiscal 2022.

In recent months, the casual-dining segment has been struggling as inflation-weary consumers trade down to fast-casual options such as Chipotle Mexican Grill or fast-food chains such as McDonald’s. Both Outback Steakhouse owner Bloomin’ Brands and Chili’s reported falling traffic in their latest quarters. Darden’s LongHorn Steakhouse and Olive Garden restaurants bucked the trend and reported stronger results than their rivals, due in part to the company’s strategy of pricing below inflation.
Still, Darden executives emphasized the Ruth’s Chris acquisition is a long-term bet and the decision wasn’t made based on the current economic cycle. Cardenas also said third-party data shows there is little overlap between Ruth’s Chris customers and those who frequent The Capital Grill and Eddie V’s. More

Peloton on Thursday reported a wider-than-expected loss in the fiscal third quarter.
The company pointed to signs of progress in its turnaround, including connected fitness subscription growth.

A person walks past a Peloton store on January 20, 2022 in Coral Gables, Florida.
Joe Raedle | Getty Images

Peloton’s shares plummeted Thursday after the company reported a wider-than-expected loss in the fiscal third quarter and acknowledged an uncertain economic backdrop.
Shares were down about 13% in premarket trading.

Yet the company pointed to signs of progress with its turnaround plan. It said connected fitness subscriptions grew and free cash flow losses declined. It also said new initiatives have resonated with customers, including a push to sell lower-priced, pre-owned bikes and a rent-to-buy program for fitness equipment. 
Here’s how the connected fitness equipment company did in the three months that ended March 31 compared with what Wall Street was anticipating, based on a survey of analysts by Refinitiv:

Loss per share: 79 cents vs. 46 cents expected
Revenue: $749 million vs. $708 million expected

Peloton’s net loss for the period was $275.9 million, or 79 cents per share, compared with a loss of $757.1 million, or $2.27 per share, a year earlier. It marked the ninth quarter in a row of the company reporting losses.
Revenue declined 22% from a year ago, dropping from $964.3 million.
The fitness company has sought to stabilize its business and find a path to profitability again, after seeing a sharp reversal of fortunes. Sales of its bikes and treadmills slowed dramatically after a pandemic-related surge, forcing Peloton to lean into other revenue sources like subscriptions.

The company ended its third quarter with about 3.1 million connected fitness subscriptions, up 5% from the year-ago period. Connected fitness subscribers are people who own a Peloton product, such as its Bike or Tread, and pay a monthly fee for access to live and on-demand workout classes.
Average net monthly connected fitness churn ticked up slightly from a year ago, too. It came in at 1.1% for the quarter, consistent with the prior quarter, but above the year-ago churn level of 0.8%.
Peloton’s overall membership, however, did not grow. It ended the quarter with 6.7 million total members, the same as the end of the prior quarter and down from 7 million in the year-ago period.
In a letter to shareholders, CEO Barry McCarthy said Peloton is looking toward the future. The company later this month will relaunch the brand and introduce a new version of the Peloton app with a tiered membership structure, he said.
McCarthy added the relaunch aims to shake up how people view Peloton, so they think of its wide variety of fitness offerings — not just its well-recognized bikes.
Yet he warned of challenges ahead. He said the company typically experiences a seasonal decline in subscriber growth in the fourth quarter, which stretches across summer months. He said he expects one this year, too.
“Notwithstanding the relaunch, Q4 will be among our most challenging from a growth perspective,” he said.
In the fiscal fourth quarter, Peloton expects connected fitness subscriptions to rise, but revenue to drop. It said it expects revenue to decline by about 6% year-over-year to a range of between $630 million and $650 million, compared with $678.7 million the year-ago period.
It expects to end the fourth quarter with 3.08 million to 3.09 million subscribers, up from 2.97 million in the year-ago period.
On an earnings call, McCarthy said consumers have continued to spend, but he said it’s hard to predict their behavior as economists debate the likelihood of a recession or “soft landing.” He said the debate in Congress over whether to raise the debt ceiling, or risk a first-ever default on U.S. debt, adds to the uncertainty.
Separately, Peloton announced Thursday that it had reached an agreement with Dish Technologies over a patent dispute. The company said it will pay Dish $75 million to settle an International Trade Commission complaint.
The company had previously said it aimed to reach break-even cash flow on a quarterly basis in the second half of its fiscal year 2023. McCarthy said in the letter Thursday that the settlement will significantly pressure free cash flow in the current fiscal quarter.
He added that the temporary hit is worthwhile because it “eliminates a cloud of uncertainty and an enormous distraction to the day-to-day operation of our business.”
McCarthy’s focus on a turnaround follows a tumultuous stretch after the company’s post-pandemic surge.
The struggles forced the company to cut costs last year by laying off thousands of employees, shuttering many of its stores and outsourcing its last-mile delivery and manufacturing. Its co-founder and former CEO John Foley also stepped down last year and later resigned as executive chairman.
As fitness equipment sales continue to lag, Peloton has focused on other ways to drive growth and attract new customers. Under McCarthy, a former Spotify and Netflix executive, the company has emphasized increasing subscriptions.
The company has tried to nudge sales of equipment by tinkering with prices, offering a rental option and adding rowing machines to its lineup. It got into wholesale by allowing Amazon and Dick’s Sporting Goods to carry its equipment. Peloton also struck a deal with Hilton to put bikes in all of its U.S. hotels.
In the shareholder letter on Thursday, McCarthy said those efforts are working.
Since the company began testing its rent-to-buy program in March 2022, it has grown to 47,000 subscribers, he said. It has an average monthly churn rate of 5%, which is higher than Peloton’s overall churn rate.
Yet McCarthy said the option, which allows customers to make rental payments and chip away at the equipment’s purchase price, reduces a barrier to sign ups. He cited an internal survey, which found that 62% of respondents would not have subscribed if it weren’t for the flexibility of the rental program.
Peloton’s sales of pre-owned bikes has also resonated, he said. The company launched that offering in December and is considering adding its treadmills and rowers to the program later this year.
Together, the two programs accounted for 24% of connected fitness hardware sales in the fiscal third quarter, he said.
Peloton’s stock has risen about 11% so far this year. Yet its shares are still less than half of its 52-week high of $18.86 — and just a tiny fraction of their over $100 highs during the early years of the pandemic.
Peloton’s market cap is $3.06 billion, after reaching as high as almost $50 billion in early 2021. More

Moderna on Thursday blew past estimates for first-quarter earnings and revenue, posting a surprise quarterly profit.
The biotech company generated first-quarter sales of $1.9 billion, down from the $6.1 billion it reported the same period a year ago amid a resurgence of Covid cases.
Moderna maintained its full-year guidance of around $5 billion in revenue from its Covid vaccine, its only marketable product.

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Moderna on Thursday blew past estimates for first-quarter earnings and revenue, posting a surprise quarterly profit, despite lower demand for Covid vaccines, its only marketable product.
The biotech company generated first-quarter sales of $1.9 billion, driven by Covid shot revenue deferred from 2022. That’s down more than 30% from the $6.1 billion it recorded in the same period a year ago amid a resurgence of Covid cases.

Moderna posted net income of $79 million, or 19 cents per share, for the quarter. That’s compared with $3.66 billion in net income, or $8.58 per share, reported during the same quarter last year.
Here’s what Moderna reported compared with Wall Street’s expectations, based on a survey of analysts by Refinitiv:

Earnings per share: 19 cents per share vs. a loss of $1.77 per share expected 
Revenue: $1.86 billion vs. $1.18 billion expected

The Massachusetts-based company’s stock edged higher in premarket trading Thursday. Shares are down more than 27% for the year through Wednesday’s close, putting the company’s market value at around $50 billion. 
Costs of sales for the quarter came in at $792 million. That included a $148 million write-off for vaccines that have exceeded their shelf life and $135 million from unused manufacturing capacity, among other expenses.
Moderna maintained its full-year guidance of a minimum of $5 billion in revenue from its Covid vaccine, which will come from signed government contracts for the shot.

CEO Stéphane Bancel said on CNBC’s “Squawk Box” he believes the company is “well on our way to execute” that target.
The company is also having discussions about new contracts with customers in Europe, Japan and in the U.S.
The U.S. will transition the federal Covid vaccination program to the private market as soon as the fall.
Bancel noted the company is in active discussion with U.S. government agencies, pharmacy chains and hospital chains about new vaccine contracts. Moderna expects more clarity around those contracts over the next four to six weeks.
The company is set to roll out more boosters after the Food and Drug Administration and Centers for Disease Control and Prevention last month authorized additional vaccines targeting the omicron variant for seniors and people with weak immune systems.
The FDA is also gearing up for a vaccine meeting in June where external advisors will select which Covid strains new vaccines will target when they roll out in the fall.
Moderna expects the U.S. to need 100 million vaccine doses annually.
But Covid shot demand is still falling as the pandemic eases and the U.S. shifts to an annual vaccination schedule rather than repeated booster doses. That’s left Moderna and rival drugmaker Pfizer scrambling to pivot away from their Covid jabs, which made both companies household names during the peak of the pandemic.
“It’s going to be a transition year,” Bancel told CNBC. He added that Moderna is “investing aggressively to grow the company.”
That means beefing up Moderna’s mRNA-based drug pipeline. 
The company’s products utilize messenger RNA technology, which teaches human cells to produce a protein that initiates an immune response against a certain disease. 
Moderna President Stephen Hoge on the company’s earnings call highlighted Moderna’s efforts to make vaccines that target more than one respiratory disease in a single dose, which he said will be “the future of our respiratory franchise.”
The company has five different combination vaccines in early clinical trials, he said.
Bancel told CNBC said the company hopes to launch a combination vaccine that targets Covid and the flu by 2025. Those shots will be adapted to the dominant flu and Covid strains circulating. 
“So you can just walk into your pharmacy and have one shot and be set for winter,” he told CNBC.
Moderna in April said it hopes to offer a new set of life-saving vaccines targeting cancer, heart disease and other conditions by 2030.
That lineup includes Moderna’s experimental vaccine that targets respiratory syncytial virus. The company expects to file for full approval of the shot for adults ages 60 and older this quarter. 
It also includes Moderna’s personalized cancer vaccine, a highly anticipated mRNA shot being co-developed with Merck to target different tumor types. Moderna is also developing a flu vaccine, but the company said the shot did not meet the criteria for early success in a late-stage clinical trial. More

For a public demonstration of the importance of ritual, the coronation of King Charles III on May 6th will be hard to beat. The ceremony will take place at Westminster Abbey, where monarchs have been crowned since William the Conqueror in 1066. There will be anointing, homage-paying, oath-taking and all manner of processing. In any other circumstances this kind of behaviour would warrant a medical diagnosis. But the alchemy of tradition means that it will instead call forth a sense of continuity and the idea of shared history. Listen to this story. Enjoy more audio and podcasts on More

BEFORE CARL ICAHN was an activist investor, he was an arbitrageur. Although it was swashbuckling corporate raids during the 1980s that made him infamous, some of Mr Icahn’s earliest campaigns involved investing in closed-end funds, a type of investment company which often trades at a discount to the value of its assets. Closing this gap, perhaps by agitating for the fund to liquidate its holdings, yields a profit.Mr Icahn’s own investment holding company, Icahn Enterprises, suffered no such discount. Until this week the firm had a market capitalisation of around $18bn, more than triple the reported net value of its assets. These include majority ownership of energy and car companies, in addition to an activist-investment portfolio. On May 2nd Hindenburg Research, a short-selling outfit founded in 2017 by Nathan Anderson, accused Icahn Enterprises of operating a “Ponzi-like” structure. Icahn Enterprises has shed more than a third of its market value since Hindenburg released its report. It has become the latest of Hindenburg’s targets to hit the skids—and the headlines. Mr Anderson’s firm has previously taken aim at Nikola, a maker of electric lorries, the Adani Group, one of India’s mightiest conglomerates, and Block, an American fintech giant (see chart).Hindenburg’s latest report alleges that Icahn Enterprises has inflated the value of its assets and funded its dividend with proceeds from selling shares to unwitting investors. It also calls on Mr Icahn to disclose the terms of personal loans secured against his majority holding in Icahn Enterprises. And it scolds Jefferies, Mr Icahn’s long-time investment bankers and the only big bank whose research analysts cover Icahn Enterprises, for allegedly turning a blind eye to the firm’s risks. Mr Icahn, Hindenburg argues, “has made a classic mistake of taking on too much leverage in the face of sustained losses”. Bill Ackman, another famed activist investor who once locked horns with Mr Icahn over an investment in Herbalife, an American supplement firm, gloated on Twitter that there was a “karmic quality” to the report. Short-sellers’ targets can be hamstrung in their immediate defences—share prices can tank quickly but detailed rebuttals take time. Even so, Mr Icahn’s first response looks muted compared with that of Hindenburg’s recent victims. In March Block described Hindenburg’s report as “factually inaccurate” and threatened litigation. In January the Adani Group accused the short-seller of “selective misinformation”. After stating that Hindenburg’s report is “self-serving”, Mr Icahn said on May 2nd merely that his firm’s performance would “speak for itself”. Jefferies has not commented on Hindenburg’s claims. Quite how messy this activist showdown becomes remains to be seen. Hindenburg’s report pitches a doyen of classic shareholder activism, which involves trying to drive a target’s share price up, against a newly prominent practitioner of short-selling, which aims to send it through the floor. The stakes are higher for Mr Icahn. His brand of activism requires investors to take him more seriously than they do the bad managers that, in his “anti-Darwinian” view, American commerce seems to promote. Icahn Enterprises must now prove that the same thing is not true of its own boardroom. ■To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter. More