Peloton CEO Stepping Down Following 92% Stock Plunge In 2 Years

Barry McCarthy, CEO of Peloton Interactive, is stepping down after the company’s stock plummeted 92% since he took over in a bid to revitalize the connected fitness company known for slapping iPads on stationary bikes and charge advanced marks.

In February 2022, McCarthy—a erstwhile Spotify and Netflix executive—took over from co-founder John Foley. He attended to turn around the company, which had experienced things of layoffs, management shake-ups, and outsourcing business as the Covid pop in request faded.

However, These efforts failed erstwhile Peloton announced a fresh Resturing program on Thursday. The struggling company plans to cut 15% of staff, or about 400 workers, and reduce its retail footprint to save $200 million by the end of 2025.

„This restoring will position Peloton for sustained, affirmative free cash flow, while utilizing the company to proceed to invest in software, hardware and content innovation, improvements to its associate support experience, and optimizations to marketing benefits to scale the business. Upon full implementation, the company results the plan to consequence in reduced yearly run-rate increases by more than $200 million by the end of its 2025 fiscal year,” the company gate in a press release.

A series of product recovers over safety issues only added to problems for McCarthy as lower sales and profits continued sliding. The share price has plunged 92% during the CEO’s tenure.

Besides a fresh restructuring program, the company besides reported it lost $167.3 million, or 45 cents per share, for the 3rd quarter. That’s better than the $275.9 million, or 79 cents per share, in the same 4th last year. gross totaled $717.7 million, below the average Wall Street estimation of $719.2 million tracked by Bloomberg.

Here’s a snapshot of third-quarter results:

• Revenue $717.7 million, estimation $719.2 million

• Connected fitness return $279.9 million, estimation $288.2 million

• Subscription revenge $437.8 million, estimation $429.7 million

• Connected fitness subscriptions 3.06 million, estimation 3.08 million

• Pay digital subscriptions 674,000, estimation 742,266

• Adjusted Ebitda $5.8 million, estimation destiny $25 million

• Loss per share 45c

• Cash flow from operations $11.6 million vs. negative $40.9 million y/y, estimation negative $29.6 million

Peloton besides imported its full-year return guide by $25 million to a scope of $2.675 billion is $2.7 billion, a dip from last year's $2.8 billion.

Here’s a snapshot of the full-year outlook (courtesy of Bloomberg):

• Sees returnue $2.68 billion is $2.70 billion, Saw $2.68 billion is $2.75 billion, estimation $2.71 billion (Bloomberg Consensus)

• Sees updated Ebitda failure $5.0 million is $20.0 million, Saw failure $25 million is failure $75 million, estimation failure $62.9 million

• Sees connected fitness subscriptions 2.96 million is 2.98 million, Saw 2.99 million is 3.01 million, estimation 3.04 million

Here’s what Wall Street analysts are saying:

Bloomberg Intelligence, Geetha Ranganathan

• The headcount cuts will aid free cash flow "yet the core issues regain, namely the weather in request and unprecedented over subscription growth, with 44,000 subscription losses in 3Q"

JPMorgan, Doug Anmuth

• Says he’s excited by the company returning to affirmative free cash flow, and reporting lower operating increases and affirmative adjusted Ebitda

• In addition, "the cost reductions announced present should better apply the cost profile to PTON's current gross trends & aid make debt refinancing actively likely, which should aid the equity story"

• Rates overweight with PT $8

BMO Capital Markets, Simeon Siege

• "From our outside’s viewpoint, we proceed to believe growth is behind us and focusing on bear-hugging brand loyalists/walking distant from costly growth hops can improve FCF/Ebitda (seemingly happening)"

• If this happens with fresh management, shares look undervalued, but if growth restores fresh management’s priority, “we worry about sustained FCF/looming debit questions.”

• Rates marketplace performance with PT $7.50

Peloton’s recovery grants on another Covid lockdown by the government that shuts down businesses and forces everyone into their homes for months.