Featured Image of this Article

Peloton Is Consulting McKinsey To Bolster Its Cost Structure

Peloton is recruiting a specialist strategic consultancy firm, McKinsey, to come in to review and bolster the company’s cost structure.

The products designed to make you sweat might just have Peloton (NASDAQ: PTON) shareholders sweating too. The growth stock decline and the stay-at-home narrative have slaughtered poor old Peloton in recent months.

Down more than 80% from its all-time highs, it’s no wonder investors are asking themselves, “what went wrong”?

A little help never did any harm.

You name it; insiders selling shares, lawsuits, marketing ploys, and now we might even see job cuts and store closures for the fitness provider — Peloton’s had it all recently.

It’s still a luxury product for many, however. The up-front cost is a barrier to a lot of people, despite the company’s thriving subscription model, which grew 87% year-over-year (YoY) and total memberships increased to over 6.2 million. To put it in perspective, hardware sales fell 17%.

It shows the success of its model, once people actually buy the hardware products. Digital subscriptions are the real money-maker, so it just comes down to effectively pricing hardware sales.

And so enters, McKinsey.

McKinsey is a specialist consultancy group, which will be coming in to advise on strategy and cost structure for the home fitness company. Noted as one of the “Big Three” when it comes to global management consultancy, the firm is a specialist in restructuring businesses and has been voted the number one consulting firm in Europe by Vault.

The company is an expert in business transformation with the aim of eliminating unnecessary operational costs, increasing cash flows, and molding vibrant company cultures that create long-term shareholder value.

It could just be the revamp the company needs to reclaim its title as the “Netflix of fitness”, tread back towards its roadmap to profitability, and be seen as a winner among the Wall Street crowd again.

Read More