?? Peloton CEO Barry McCarthy resigns, Tesla cuts more jobs, Apple's iPhone sales in China jump 12% in March and more.
Hello, dear readers! ??We hope you had a great week.? Here's your weekly update on the latest news from finance and markets.
Peloton CEO Barry McCarthy is stepping down, with the company laying off 15% of its staff due to the necessity of aligning spending with revenue. Tesla has laid off employees from its software, service, and engineering departments. This decision follows the automaker's recent disbandment of its EV charging department and announcement of a workforce reduction exceeding 10%. Shares of Walt Disney (DIS) are sharply declining, despite recent gains, following the Q2 earnings report. In March, Apple saw a 12% increase in iPhone shipments in China, attributed to price cuts initiated by both the company and its retailers. Investors are selling off Airbnb (ABNB) today, despite the company reporting better-than-expected earnings and sales for Q1.
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Peloton CEO Barry McCarthy resigns; Company plans layoffs to reduce debt
Peloton CEO Barry McCarthy is stepping down, with the company laying off 15% of its staff due to the necessity of aligning spending with revenue. McCarthy, formerly with Spotify and Netflix, will stay on as a strategic advisor until year-end, while Karen Boone and Chris Bruzzo step in as interim co-CEOs. Boone, previously CFO at Restoration Hardware, and Bruzzo, a longtime Electronic Arts executive, will guide Peloton while the company seeks a permanent CEO. The restructuring plan includes a 15% reduction in global staff, about 400 employees, alongside the closure of retail showrooms and adjustments to international sales. These changes aim to realign Peloton's expenses with its current business size, expecting over $200 million in annual expense reduction by 2025. Payroll, marketing, retail, IT, and software spending will see cuts, with emphasis on research, marketing, and international teams. McCarthy, who took over in 2022, has spent the past two years reorganizing Peloton and steering it towards growth.
Tesla cuts more jobs in software and service departments
Tesla has laid off employees from its software, service, and engineering departments, as reported by tech publication Electrek. This decision follows the automaker's recent disbandment of its EV charging department and announcement of a workforce reduction exceeding 10%. Employees received emails over the weekend as part of broader layoffs. Last month, Tesla disclosed plans to lay off over 6,700 employees across multiple locations. Facing declining sales and heightened competition in the electric vehicle market, Tesla aims to prioritize autonomous driving software, robotaxis, and projects like its humanoid robot Optimus. Analysts suggest that CEO Elon Musk may be cutting spending on certain teams to allocate funds to these initiatives. The company expects to incur more than $350 million in costs related to the layoffs in Q2. Notable departures include executives Drew Baglino, Rohan Patel, Rebecca Tinucci, and Daniel Ho.
Walt Disney's shares decline: Soft Q3 outlook for streaming business
Shares of Walt Disney (DIS) are sharply declining, despite recent gains, following the Q2 earnings report. Despite DIS beating Q2 EPS expectations and raising its FY24 EPS guidance, disappointment stemmed from a soft Q3 outlook for the Entertainment DTC business and slowing demand for domestic theme parks. In Q2, DIS achieved a milestone with the DTC portion of its Entertainment segment generating a surprise profit. Better-than-expected Disney+ Core subscriber additions and increased average revenue per user contributed to this success. DIS also reiterated its expectation of full streaming profitability by Q4. Additionally, the Experiences segment, mainly the theme park business, saw revenue and operating income increase, with international parks leading the surge.
Apple's iPhone sales in China jump 12% in March following price reductions
In March, Apple saw a 12% increase in iPhone shipments in China, attributed to price cuts initiated by both the company and its retailers. Data from the China Academy of Information and Communications Technology (CAICT) indicated a similar 12% rise in foreign-branded phone shipments compared to the previous year. While not explicitly stated, Apple's dominant presence in China's smartphone market suggests its role in this surge. The boost in sales follows intensified discounting efforts by Apple and third-party sellers, offering discounts of up to 10% on some iPhone 15 models. These price reductions stimulated demand and fueled Apple's growth in China, marking a notable reversal from the 37% sales decline in the first two months of 2024. During Q1 of this year, Apple experienced a 19% decrease in smartphone shipments in China, marking its weakest performance since 2020.
Airbnb faces challenges after disappointing Q2 forecast
Investors are selling off Airbnb (ABNB) today, despite the company reporting better-than-expected earnings and sales for Q1. ABNB's bookings growth, referred to as Nights and Experiences Booked, increased by 9.5% year over year, in line with its previous forecast of moderation compared to the 12% growth in Q4. However, ABNB expects a similar growth rate in Q2 after several periods of moderating growth, which disappointed the market, as it was weaker than anticipated. The company's Q2 revenue guidance of $2.68-2.74 billion fell short of analyst expectations, contributing to investor concern. Although ABNB's performance improved in key areas like hosting quality and platform enhancements, with active listings growing by 17% year over year, investors may have expected stronger growth, particularly after competitor BKNG's impressive Q1 results. Despite these challenges, ABNB remains focused on expanding into new markets, crucial for sustaining growth, especially considering strong demand overseas observed in other companies like BKNG.
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