Peloton Interactive (NASDAQ:PTON) plunged in trading after announcing that Barry McCarthy will be stepping down as President, CEO and Director of the Peloton Board. McCarthy will be a strategic advisor to the company through the end of the year. Karen Boone, the current Chairperson of Peloton and Chris Bruzzo, a Peloton Director will act as Interim Co-CEOs at Peloton.
The company will search for a new CEO in the mean time and Jay Hoag will be appointed as the new Board Chairperson.
Peloton’s Comprehensive Restructuring
In addition, Peloton announced comprehensive restructuring for “sustained, positive free cash flow.” According to a CNBC report, the company will also lay off 15% of its employees as it “simply had no other way to bring its spending in line with its revenue.” The layoffs are likely to impact roughly 400 Peloton team members.
The company anticipates that this cost cutting will result in reducing its annual expenses annually by more than $200 million by the end of FY25.
Peloton’s Third Quarter Results
In addition, Peloton announced its Fiscal third quarter results. The exercise equipment company’s losses narrowed in the third quarter to $0.45 per share as compared to a loss of $0.79 per share in the same period last year. However, this loss was wider than analysts’ expectations of $0.36 per share.
The company posted total revenues in the third quarter of $717.7 million, a decline of 4.2% year-over-year as compared to Street estimates of $718 million.
PTON Lowers FY24 Outlook
Moreover, Peloton lowered its FY24 outlook for Paid Connected Fitness Subscriptions by 30,000, or 1%, at the guidance midpoint to 2.97 million. Furthermore, at the end of FY24, the company expects paid app subscriptions to be between 0.6 million and 0.61 million.
PTON anticipates that its FY24 revenues will be between $2.67 billion and $2.7 billion, while adjusted EBITDA is likely to vary from a loss of $20 million a loss of $5 million.
Is PTON Stock a Good Buy?
Analysts remain sidelined about PTON stock, with a Hold consensus rating based on five Buys, 14 Holds, and two Sells. Over the past year, PTON has declined by more than 65%, and the average PTON price target of $6.29 implies an upside potential of more than 100% from current levels.
