What happened

Shares of Peloton Interactive (PTON -0.55%) raced higher on Thursday, surging as much as 6%. By 10:58 a.m. ET, the stock had turned lower, down 1.2%.

The catalyst that sent the fitness company running higher before it stumbled was a report that the company plans to reduce its workforce yet again in a bid to stem its mounting losses.

So what

Peloton plans to cut as many as 500 more jobs, which amounts to about 12% of its current employees, the latest step in the company's far-reaching turnaround efforts, according to a report in The Wall Street Journal. After the layoffs, the company will have roughly 3,800 worldwide staff, having reduced its workforce by more than half. This marks the fourth round of job cuts so far this year. 

The move comes fast on the heels of 600 job cuts Peloton announced in June and another 800 in August. The biggest reduction came in February, when the company slashed 2,800 positions. 

CEO Barry McCarthy said this is the final significant workforce reduction, but isn't pulling any punches, saying the company has "another six months or so" to mount a turnaround. If those efforts aren't successful, he doesn't believe Peloton will survive as a stand-alone company, according to the report.

Now what

Peloton was riding high at the height of the pandemic but has since suffered six successive quarters of mounting losses as people returned to their pre-pandemic routines. The worst results came in the company's fiscal 2022 fourth quarter (ended Jun. 30), when Peloton generated a loss of $1.2 billion, bringing its total losses for the fiscal year to $2.8 billion. 

In an effort to get its business back on track, Peloton has cut jobs, outsourced the manufacturing of its exercise equipment, and cut prices on slow-moving inventory. The company also raised the prices on its most popular connected fitness products, the Peloton Bike+ and the Peloton Tread.

It remains to be seen if the company's efforts will ultimately be successful. As a Peloton shareholder, I haven't sold, but I haven't added any stock either. Until it shows signs that its turnaround is taking hold, I'd "tread" carefully with Peloton stock.