[caption id="attachment_87990" align="aligncenter" width="690"] Level down.[/caption] Zwift Redundancies Today, Zwift informed staff about forthcoming headcount reductions but did not specify the number of people affected. More: Announcement Going forward, Eric Min will continue as CEO but his co-CEO, Kurt Biedler, has resigned. This raises obvious doubts about Zwift's financial status. The company reassures us that it is financially healthy and still experiencing community expansion. However, the growth is below expectations, hence the need to cut costs. The easiest way to do that is to get rid of staff. Alongside this, Zwift strongly hinted that there will be further additions to the product offering, implying that there will be no negative impact on your Zwift experience. At least not in the short term. Somewhat annoyingly for those who lose their jobs, Zwift remains committed to its sponsorship spend, supporting events like the Tour de France Femmes avec Zwift which will continue at least until 2025. Staff losses are thought to apply across the board rather than focus on one specific department and Zwift somewhat strangely also states that it will continue to recruit "new talent". https://the5krunner.com/2024/02/08/wahoo-fitness-kickr-core-zwift-one-opinion/ Take Out Clearly, Zwift is struggling although the situation seems not immediately terminal. I would assume it still has cash to burn. I was surprised to find that Zwift only has revenues of $103m (2023) yet received a cash injection of $450 in early 2020 (and $620 in total). After such a large funding round that level of revenue is 'a bit rubbish' for the market leader. At the time, the funding implied an eye-wateringly high valuation of $1bn, but the reality is that it is not worth anything close to that as of February 2024. I don't place too much weight on the effects of the company's, now-settled, legal spat with Wahoo on the company's performance nor the impact from several smaller competitors in the market like My Whoosh and VirtuPro. Sure, other companies may have stolen a few customers here and there but I suspect that Zwift simply geared up its cost base too rapidly last year ($620m cash injection) as cyclists tightened their belts and kept their wallets closed. Simply put, the hoped-for subscribers didn't materialise in sufficient numbers. [caption id="attachment_88172" align="aligncenter" width="881"] Buy KICKR Core Zwift One[/caption] Where now? Zwift's shareholders will certainly be looking for an exit at some point. Would you spend $1bn on a loss-making company based on revenues of $100m? I wouldn't. If you spend $1bn you hope to either sell the company for more in the future or get $10bn (ten) in cash out of it over the years. That is wishful thinking on either count. No one is buying Zwift for that price any time soon. I'm certain of that. I can't see any option other than an unprofitable Zwift dying a relatively long and painful corporate death as it limps from one funding round to the next with existing shareholders getting ever more diluted. Eventually, Zwift will run out of new financial backers and run out of cash as a result. That's bankruptcy. At that point, someone like Garmin might buy the assets at a knockdown price as existing shareholders cut their losses and who knows what would happen after that. [caption id="attachment_12913" align="aligncenter" width="1024"] Image|Zwift[/caption]
