Peloton Q3 earnings: CEO Barry McCarthy to step down

Peloton Interactive Inc (NASDAQ: PTON) is pushing to the upside this morning even though it came in shy of Street estimates for the third quarter.

Why is Peloton stock up today?

The price action is particularly interesting considering the connected fitness company failed to impress with its guidance as well. $PTON now forecasts its revenue to fall between $2.68 billion and $2.70 billion in the current quarter. 

Analysts, in comparison, were at $271 million. But the stock is up perhaps because of what CEO Barry McCarthy said in a letter to shareholders today:

We are announcing a new restructuring program to reduce annual expenses by more than $200 million … to generate sustained and meaningful positive Free Cash Flow. We expect to reduce our team size by 15%, or roughly 400 global team members.

I've covered Peloton $PTON for years and called it what it was. Over hyped and overvalued.

I also said it needs to be acquired because it CANNOT be a standalone company

Well, Barry steps down and lays off 15%

“Upon full implementation, the company expects the plan to result in… https://t.co/bbBq5FEzJY pic.twitter.com/XZJqRCecFH

— Paul Cerro (@paulcerro) May 2, 2024

The Nasdaq listed firm is convinced it will turn adjusted EBITDA positive this year. Peloton stock is still down some 50% versus the start of 2024. 

$PTON Q3 earnings snapshot

• Lost $167 million versus the year-ago $276 million
• Per-share loss also narrowed from 79 cents to 45 cents
• Adjusted EBITDA printed at $5.8 million as per the earnings report
• Revenue inched down 4.0% year-over-year to $717.7 million
• Consensus was 36 cents a share loss on $718.59 million in revenue

Peloton ended the third quarter with 3.06 million paid subscribers – down about 1.5% versus last year. CEO McCarthy also said on Thursday:

Q3 highlights the tremendous progress we have made in re-architecting our cost structure, as evidenced by our achievement of positive
Free Cash Flow for the first time in over 3 years.

Peloton is looking for a new chief executive

Also on Thursday, Peloton said Barry McCarthy is stepping down as its chief executive. The exercise equipment company has “initiated a comprehensive search process to identify its next CEO”.

In the meantime, Karen Boone (chairperson) and Chris Buzzo (director) will serve as interim Co-CEOs of $PTON. McCarthy will remain with the New York based company as a strategic advisor through the end of 2024.

Wall Street currently has a consensus “underweight” rating on Peloton stock.

Watch here: https://www.youtube.com/embed/pFvZ8lZ1VkU?feature=oembed

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