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Peloton Announces Another Round of Job Cuts

Peloton's CEO is questioning the company's standalone viability

Deputy Editor
Oct 6, 2022 at 9:16 AM
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Peloton Interactive Inc (NASDAQ:PTON) is up 1.1% to trade at $8.58 ahead of the open, after the fitness company announced it would cut another 500 jobs -- about 12% of its remaining workforce. This is the fourth round of layoffs the fitness equipment maker has announced in 2022, as it seeks to turnaround from lackluster sales and dampened investor confidence. Per the Wall Street Journal, Peloton's CEO Barry McCarthy said the company's standalone viability is on the line, and it has another six months or so to turn things around.

On the charts, PTON's struggles became apparent in November 2021, after the company lowered its full-year sales forecast by $1 billion. The resulting bear gap saw the shares lose 35.4% on Nov. 5, and since then carve out a channel of lower lows and tight trading range. Year-over-year, Peloton stock is down 89.7%. 

Analyst sentiment towards PTON remains relatively strong despite the underperformance, but that optimism is beginning to unwind. Coming into today, however, 13 of 23 covering brokerages still recommend a "buy" or better rating. The 12-month consensus target price of $17.07 -- a nearly 100% premium to last night's close -- also suggests some price-target cuts could be overdue.

Options traders have favored calls of late. Over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Peloton stock's 10-day call/put volume ratio of 1.98 ranks higher than 88% of annual readings. Short-term options traders have been more bullish than usual, too, per the security's Schaeffer's put/call volume ratio (SOIR) that sits at 0.70 and ranks in the low 8th percentile of annual readings. 

It's also worth mentioning PTON's Schaeffer's Volatility Scorecard (SVS) sits at an elevated 86 out of 100, indicating the security has frequently exceeded option traders' volatility expectations during the past year.


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