Peloton’s CEO has denied a report the troubled company plans to halt production on its Bikes and Treads to cut costs, adding that the company has identified the “leaker” and is taking legal action.
The CNBC scoop published Thursday cited internal documents obtained by the network. The news sent Peloton’s stock spinning out of control Thursday afternoon. It plunged 25% and even triggered a trading halt.
By end of day Thursday, the stock had completed the erasure of all of its 2020 pandemic gains before slightly rebounding Friday, up 12% on the CEO’s denials.
It capped off a disastrous downhill week for the company that included reports of staff layoffs, losing its spot on the Nasdaq-100 index, hiking prices on Bikes and Treads, and news that executives and insiders sold nearly $500 million in stock before its descent.
To think, the fictional death of beloved Sex and the City character Mr. Big post-Peloton ride was just last month.
In an effort to turn things around, the company brought on consulting firm McKinsey & Co. to “review its cost structure and potentially eliminate some jobs,” according to a separate CNBC report.
“In the past, we’ve said layoffs would be the absolute last lever we would ever hope to pull. However, we now need to evaluate our organization structure and size of our team,” Peloton CEO John Foley wrote in a letter to Peloton staff posted to the corporate website.
Despite all the bad press, the company’s preliminary second quarter earnings results are close to target. The company will report earnings after the stock market closes on Tuesday, February 8.
