Friday's Headlines: Peloton Slashes Its Workforce Again
Here were the biggest movers in the MyWallSt shortlist yesterday:
Moving Up ⬆️
Trex (TREX) +5.8%
Pinterest (PINS) +4.9%
Upstart Holdings (UPST) +3.9%
Moving Down ⬇️
Stitch Fix (SFIX) -6.1%
American Tower (AMT) -5.2%
DocuSign (DOCU) -4.3%
DraftKings (DKNG) -4.0%
Twitter (TWTR) -3.7%
Here are the stories that you need to know ahead of market-open today, Friday the 7th of October.
Peloton Slashes Its Workforce Again 😭
Peloton (PTON) has announced plans to cut a further 500 jobs — roughly 12% of its overall workforce — in the latest in a series of cuts that have occurred since Barry McCarthy took over as CEO earlier this year. Somewhat surprisingly, investors took this radical move as a sign of potential strength and sent the beleaguered fitness manufacturer’s stock sailing up over 4% yesterday.
When McCarthy took over the reins from former CEO John Foley back in February it was clear that drastic change was needed. He came from previous positions at Spotify and Netflix and, with that expertise, it was expected that McCarthy could develop a winning strategy for Peloton to reclaim some of the growth it gained during its pandemic-driven surge.
Drastic changes have since occurred, including the aforementioned rounds of layoffs and significant changes to the company’s business model. However, McCarthy now claims that “the restructuring is done with today’s announcement…now we’re focused on growth.”
In an internal memo circulated at Peloton yesterday, McCarthy stated that he has “never felt more optimistic about our future,” adding that the layoffs and internal restructuring “have positioned us to meet our fiscal year-end goal of break-even cash flow, with a renewed focus on accelerating our growth.”
Despite some positive investor sentiment throughout the last week, Peloton is still down almost 75% this year-to-date and sits close to 95% off all-time highs seen in late December 2020. While it’s clear that McCarthy is certainly trying to spark some positive change at the firm, a lot more will be needed for Peloton to return to anything even resembling its former glory.
AMD Warning Sends Its Stock Tumbling 😬
Semiconductor manufacturer AMD has announced preliminary results for its third quarter, and the numbers are far off what many had been expecting. Predicted revenue of $5.6 billion would see the firm come in $1.1 billion below its own guidance, while non-GAAP gross margin appears set to hit the 50% mark when it had been expected to be at 54%. Shares in AMD are falling premarket as a result, with it currently down 5% ahead of market open.
AMD has blamed these preliminary results on a “weaker than expected PC market.” The company’s CEO, Lisa Su, expanded on this by explaining that “while our product portfolio remains very strong, macroeconomic conditions drove lower than expected PC demand and a significant inventory correction across the PC supply chain.” It’s not all bad news for the company, however, with other segments such as gaming, data centers, and embedded units all appearing to meet expectations.
This news was somewhat to be expected, with other chipmakers such as Nvidia and Intel both having cut back projections for this quarter already, while also lamenting a build-up of inventory that’s going to have to be shifted. Both of these companies felt the impact of AMD’s revenue warning, with each of them dropping close to 3% premarket today already.
AMD has already suffered this year at the hands of a rotation away from tech and growth stocks, with its stock down over 54% year-to-date. Its full earnings report is expected to be released on November 1.
Pinterest: Return of the King 👑
Pinterest (PINS) rallied more than 4% on Thursday after Goldman Sachs analyst Eric Sheridan upgraded the stock to a buy. The firm also increased the social media company’s price target to $31, up from $24.
According to Sheridan, despite the “uncertain times” in the online advertising market, Pinterest still has many healthy green shoots. Over the long term, the company should be well-positioned to benefit from “rising engagement rates, social commerce, and the creator economy”.
Sheridan also agreed with the MyWallSt analyst team (as seen in Pinterest’s latest comment update) that the digital mood board site has plenty of room to increase average revenue per user by expanding international monetization.
Sheridan’s optimism was somewhat reflected by analysts at Piper Sandler, who also recently raised Pinterest’s price target.
The news comes on the back of a good month for Pinterest’s stock — it’s up more than 15%. Much of this momentum seems to be coming from the almost constant acquisition rumors. Many of these cropped up in the wake of Elliot Management taking a hefty stake in both Pinterest and PayPal. In October of 2021, it was hinted that PayPal was interested in acquiring Pinterest for its newly established e-commerce segment so maybe Elliot can finally seal the deal.
However, last week, financial news outlets were also abuzz that Google may be interested after CEO Sundar Pichai declined to state whether or not Pinterest was an acquisition target.