Netflix, Peloton and Zoom bring pandemic-stock era to a shuddering halt
On the back of a surge in users, Peloton was considering a customer-support centre in Cork.
Peloton shares rebounded on Friday after the company's chief executive John Foley vowed to slash expenses at the struggling fitness company, though he disputed reports it had idled its factories to save money.
Foley said Peloton was “right-sizing our production, and, as we evolve to more seasonal demand curves, we are resetting our production levels for sustainable growth.”
The shares gained as much as 16%, marking the biggest intraday increase since May. Still, they failed to recoup the losses from Thursday, when the stock plunged 24%.
Peloton is reeling from a slowdown triggered by consumers emerging from pandemic lockdowns and returning to traditional gyms. It had been a Wall Street darling when customers were stuck at home and demand outstripped supply.
The had reported in September that the company was considering establishing a customer support centre to be located in Cork but it is now back-pedalling on that plan. Instead, the company is considering jobs cuts to get itself back on track, Foley said.
“In the past, we’ve said layoffs would be the absolute last lever we would ever hope to pull,” he said.
“However, we now need to evaluate our organisation structure and size of our team, with the utmost care and compassion. And we are still in the process of considering all options as part of our efforts to make our business more flexible.”
Referring to reports that Peloton had temporarily shut down production, Foley said leaks of confidential information “have led to a flurry of speculative articles in the press. The information the media has obtained is incomplete, out of context, and not reflective of Peloton’s strategy.”
He said the company had identified a leaker and was “moving forward with the appropriate legal action.”
Peloton also released a preliminary report of $1.14bn (€1bn) in sales during the fiscal second quarter, which ended on December 31.
Peloton and media streaming giant Netflix were the highest-profile stars of the lockdown era, enjoying soaring share prices but both plunged this week in the latest sign that investors have moved on from the so-called pandemic trade.
Netflix expects to add a paltry 2.5m users in the current quarter, well short of estimates. Netflix shares tumbled as much as 23% on Friday.
Others are suffering as well. Zoom Video Communications, the owner of the ubiquitous video conferencing software, is trading at the lowest level since May 2020, as is e-signature company DocuSign.
• Bloomberg
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