Shares of Peloton Interactive (PTON) plunged to an unprecedented low Thursday following the company's announcement of major cost-cutting strategies, including significant layoffs, and the resignation of CEO Barry McCarthy.
Peloton has committed to“comprehensive restructuring efforts” designed to align the organization's cost structure better with the current scale of its business, positioning it for "sustained, positive free cash flow." The restructuring involves reducing its workforce by 15% (approximately 400 positions), continuing the reduction of its retail showroom footprint, and modifying the company's international market entry strategy to maximize efficiency.
This announcement coincided with the company's disappointing fiscal results for the third quarter of 2024. Peloton reported a loss of 45 cents per share, and the year-over-year revenue dropped by 4.2% amounting to $717.7 million, both failing to meet estimates compiled by Visible Alpha.
Revenue from connected fitness dropped by 13.6% to $279.9 million, subscriptions revenues saw a mild increase of 3.1% to $437.8 million. The company also observed a slight dip in membership by 1.5% to 6.6 million.
McCarthy, who took the helm at Peloton in February 2022 succeeding co-founder John Foley, initiated significant restructuring amid a decrease in demand after a surge during the COVID-19 lockdowns. Karen Boone, the current Chair, and Director Chris Bruzzo, would replace McCarthy on an interim basis. However, McCarthy will continue to serve as a “strategic advisor” till the end of 2024.
By 11 a.m. Thursday, Peloton's shares had slumped 14.4% to $2.76, and it has lost around 54% of their value this year.