Another cost-cutting plan has been announced, and with it, Peloton is set to conduct layoffs. Reports indicate that Peloton will cut 6 percent of its global staff and make other operational changes, aiming to achieve at least $100 million in run-rate savings by the end of fiscal year 2026. Shifting away from its centralized promotion of cardio-based fitness, the organization is set to target a broader segment of the health and wellness industry in an attempt to make its overall business more profitable.
Peloton’s cost-saving layoffs and altered business goals were announced during the Q4 2025 earnings call earlier this month. We also learned that apart from the renewed focus on “health span,” the company is also going all-in on AI.
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Peloton Layoffs to Eliminate 6% of the Global Workforce
Peloton, a brand known for its advanced exercise bikes and other equipment, is hoping to expand the brand beyond cardio fitness and become “the world’s most trusted wellness partner across the full array of behaviors that maximize health demand,” according to CEO Peter Stern. He noted that while the lifespan of US citizens has expanded by 40 years from 1900 to 2020, the quality of life has failed to keep up. “People are living longer, but they’re also living sicker in the U.S,” he stated.
With this in mind, the brand is trying to rewrite its position in the health and fitness industry, but for many employees, this marks the end of their contributions to the brand. The Peloton layoffs will affect 6% of its global workforce. “This is not a decision we came to lightly, as it impacts many talented team members, but we believe it is necessary for the long-term health of our business,” Stern told shareholders.
While the news was met with disappointment by employees, the company’s shares recently rose 11 percent following its Q4 2025 fiscal report. While the company’s performance largely exceeded expectations, the CEO noted that operating costs were too high and needed to be brought down.
Peloton’s workforce cost-cutting plans have not been detailed publicly, so it is unclear if the company intends to target a specific department or if it will make performance-based cuts across roles. This marks Peloton’s second round of job cuts in just over a year. In May 2024, the company terminated 15% of its workforce, and its former CEO, Barry McCarthy, stepped down from his role.
Peloton Cuts Staff, Announces Changes to Pricing Strategy and AI Investments
Peloton’s cost-saving layoffs are only one part of the puzzle. The organization is also likely to relocate some work and look at other spending that can be cut down by the end of the 2026 fiscal year. Reports indicate that the company is also adding additional pricing for hardware assembly, a service that was previously free. It is also exploring special pricing for certain categories of professionals, like first responders and military personnel, which should help expand its user base to a degree.
The company’s Chief Technology Officer, Francis Shanahan, has also been instructed to “focus on artificial intelligence efforts,” which could mean an expansion of the personalized workout plans and AI subtitles for classes provided by the organization. The CEO was heard saying, “AI has the potential to give humans superpowers, and so that’s how we’re using AI.” The exact nature of future integrations remains unknown, but the company is expecting its team to use Google Gemini to come up with some creative applications.
We will likely see further AI integration in other products and services as well, a large majority of which we expect will be app-based rather than equipment-based. While Peloton is primarily known for its bikes and treadmill equipment, the company has largely evolved into a subscription-based business, which has allowed it to downplay how much the company has been affected by the tariffs.
The Number of Job Cuts In the US Continues to Mount
While there has been conflict around the data regarding job creation and the state of the job market in 2025, there is considerable evidence to suggest that the number of layoffs has been concerningly high. A report from Challenger, Gray & Christmas suggested that US-based employers announced 62,075 job cuts in July, which was up 29 from the 47,999 announced in June, and a whopping 140% up from the 25,885 announced in the same month last year.
In 2025, companies have announced 806,383 job cuts, which is the highest level year-to-date since 2020 when 1,847,696 were announced. The report also highlighted where the cuts have been the heaviest, and the federal layoffs have been responsible for the biggest outflow of employees into the unemployment market. While some of these cuts are still being contested, the 292,294 job cuts reported by Challenger, Gray & Christmas paint an alarming picture.
In the private sector, the technology industry appears to be largely leading the pack with 89,251 job cuts in 2025. Retail, non-profits, and the automotive industry have also announced cuts of their own. While it’s well-known that DOGE (Department of Government Efficiency) cuts, AI investments, and cost-cutting strategies have a hand in these workforce reduction plans, it is also clear that tariffs, inflation concerns, loss of funding, and the general state of the market have also affected businesses. The Peloton layoffs are a result of a mix of these factors and further add to the concerns regarding the job market and the state of employment opportunities in 2025.
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