Peloton freezes hiring after it slashes its forecast and shares drop 35%

Peloton halted hiring across all departments effective immediately during an all-hands meeting on Friday, CNBC has learned. The news comes a day after after Peloton slashed its full-year outlook amid slowing momentum for its fitness products.

It wasn’t immediately clear how long the hiring freeze will last.

A Peloton spokesperson didn’t immediately respond to CNBC’s request for comment.

Peloton’s management team had hinted to analysts during a conference call Thursday that it would be making cost cuts in the near future to realign with its sluggish revenue and user growth.

“Some of these identified areas of savings include making significant adjustments to our hiring plans across the company, optimizing marketing spend and limiting showroom development…,” chief financial officer Jill Woodworth said on the call.

Peloton dropped 35% on Friday, wiping off more than $9 billion off its market value. Shares have fallen about 63% year to date.

The company saw rapid growth in 2020, as consumers took on stay-at-home lifestyles during the pandemic. And Peloton invested heavily to meet that demand. It acquired Precor, another fitness equipment manufacturer, for $420 million. It also invested heavily in air freight to speed deliveries from overseas. In recent months, it has ramped up marketing efforts to sell its original Bike product, which is now 20% cheaper, and a redesigned Tread treadmill machine.

Now, however, as more people return to gyms — like Planet Fitness — or decide to purchase another at-home fitness option — like Tonal or Hydrow — Peloton is scrambling to readjust for the future.

The business had been on a hiring spree. Peloton employed 6,743 people in the United States as of June 30, more than double the roughly 3,281 employees it counted a year earlier, according to annual filings.