Shares of Peloton (NASDAQ:PTON) are under pressure today on media reports that the fitness company is planning to lay off staff and close several stores.
If true, the layoffs and store closures would be more bad news for Peloton. Investors likely know that PTON stock is down 80% over the past 12 months to $30 following several high-profile recalls of its treadmills and stationary bikes. Additionally, sentiment toward the at-home workout company has soured coming out of the global pandemic.
Investors should note though that the company has not yet announced any layoffs or closures.
What Happened With PTON Stock
Media reports are circulating that Peloton is planning to cut 41% of its sales and marketing staff and close 15 retail stores as part of a cost reduction strategy dubbed “Project Fuel.” The reports say that Peloton is looking to eliminate positions with overlapping responsibilities.
The reports further say that Peloton is looking to reduce the headcount of its e-commerce staff amid declining sales and bad publicity that has hurt the company’s image. Now, investors are wondering if Peloton is trying to hide the potential layoffs and closures from investors.
While nothing has been confirmed, PTON stock was in the spotlight during pre-market trading today.
Why It Matters
Peloton stock has been in freefall since last year when the company announced several product recalls after several people were injured and at least one child was killed by its treadmills. More recently, PTON stock fell sharply after it was revealed on the revival of a popular television show that a leading character died while exercising on a Peloton bike.
PTON stock ran up 753% in 2020 during the depths of the global pandemic. Public gyms had closed their doors, so many consumers turned to Peloton for at-home workouts. However, the shares have experienced a sharp downturn over the last year as economies reopen and the workout-at-home trend fades. Last week, Nasdaq removed Peloton stock from the Nasdaq-100 index.
What’s Next for Peloton
News of the layoffs and store closures seems to be causing further harm to PTON stock at a time when the share price was already suffering. The narrative around the company, which raised its prices last week, appears to have gone from bad to worse. Management will have to publicly address today’s reports. But given the continued slide in the stock, investors would be smart to steer clear of Peloton shares.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.