Peloton Profits, Cuts Jobs, Eyes Wellness Shift

Peloton reported a surprise profit in its fiscal fourth quarter, driven by cost-cutting measures such as reduced marketing and administrative expenses, a 6% global workforce reduction, and relocation of some operations to save an additional $100 million annually. The company expects continued declines in hardware and subscription sales for 2025 and projects a 2% revenue drop for fiscal 2026, in line with analyst expectations. CEO Peter Stern announced a strategic shift toward broader health and wellness offerings, including strength training, sleep, meditation, nutrition, and AI-driven personalized insights. Peloton faces challenges from increased competition, the fallout of a major product recall, and macroeconomic pressures. Gross margin and profitability have improved, but tariffs are projected to impact 2026 free cash flow by $65 million, leading to planned price adjustments. Analysts are divided on Peloton's turnaround prospects, with some optimistic about leveraging subscriptions and wellness trends while others remain skeptical.