After cutting 15% of staff and saying goodbye to its CEO, Peloton must figure out what’s next

Peloton is dismissing a chunk of its workforce, including its top executive. Barry McCarthy announced that he is stepping down as the CEO of the fitness tech company, which is laying off approximately 400 workers.

The Peloton employees who have received pink slips account for about 15% of the company’s total workforce. As part of this round of layoffs, Peloton is enacting a broad restructuring plan that will see it close retail showrooms and reconfigure its business abroad.

That shift will happen under a new leadership team. McCarthy, a Netflix vet, took over as Peloton CEO in 2022 when he replaced the company’s Co-Founder, John Foley. For the time being, McCarthy will be succeeded by a pair of interim CEOs: Board Chair Karen Boone and Director Chris Bruzzo.

Boone and Bruzzo are planning to pass off CEO duties to a permanent replacement, who will be put at the controls of a company that finds itself in significant financial turmoil. In an open letter announcing both the layoffs and his departure, McCarthy explained that the restructuring plan is a necessary step that will help Peloton refinance its debt.

“Hard as the decision has been to make additional headcount cuts, Peloton simply had no other way to bring its spending in line with its revenue,” McCarthy wrote. “The company had to do that in order to generate sustainable positive [free cash flow].”

McCarthy’s tenure as Peloton CEO began with some amount of optimism. Though the company had fallen from the heights it achieved during the early days of the COVID-19 pandemic, it continued to generate headlines through partnerships with streaming services and platforms like TikTok. Peloton’s attempt to reimagine itself as a general entertainment destination was a bold shift, but the company seems to be returning to the same question it’s asked for years: Can a mix of high-end exercise equipment and premium content for the basis for a profitable enterprise?

As of now, Wall Street seems to be skeptical of Peloton’s latest rebranding effort. The company’s stock price cratered after the news of its layoffs went live — its shares declined by as much as 16%.