What happened
Investors gave Peloton Interactive (PTON 2.62%) a huge boost early this week after the company announced a new partnership with Hilton Worldwide Holdings (HLT 0.97%): By the end of the year, there will be at least one Peloton bike in every Hilton-branded hotel -- all 5,400 of them.
Investors were understandably excited about the deal, and bid Peloton's stock up by 24.3% over the past week, according to data provided by S&P Global Market Intelligence. Those gains came in spite of the recent news that the connected-fitness company is laying off more employees.
Image source: Peloton.
So what
"This unique and exciting partnership with Peloton -- a brand so many of our guests know and love -- accelerates an important part of that equation, allowing us to enhance the stay with an innovative approach to fitness." Hilton's chief brand officer, Matt Schuyler, said in a press release about the deal.
As part of the partnership, Peloton will give U.S.-based Hilton loyalty program members a free 90-day trial subscription to the Peloton App so they can access the company's on-demand classes, as long as they are first-time Peloton users.
While investors celebrated the deal, not everything the company announced this week was good news. On Thursday, Peloton said that it will lay off an additional 500 employees. It's the fourth time this year that it has cut staffing.
Now what
While its share price spiked this week, things aren't exactly great for the connected-fitness company right now.
Peloton CEO Barry McCarthy, who has only been in the position since February, told The Wall Street Journal in an interview this week that the company has six months to prove that it can be viable. That's not exactly the sort of thing shareholders want to hear from a CEO, and while McCarthy followed that up later with a statement that asserted that "the business is performing well and making steady progress," it should serve as a warning to prospective investors that this new partnership with Hilton doesn't mean Peloton's problems are solved.
