Topline
Peloton co-founder and CEO John Foley will step down from his role as a part of a larger overhaul of the company which also includes changes to its board and cost cuts, the company announced on Tuesday, a move that comes just a day after the fitness company’s battered stock price surged 20% amid reports of a potential sale.
Peloton CEO John Foley is set to step down from his role.
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Key Facts
In a press release, the company announced that Foley will step down from his role and become the executive chair, while former Spotify and Netflix CFO Barry McCarthy will take over as Peloton’s new chief executive.
In an effort to slash costs, the company said it will also cut around 2,800 jobs, including 20% of its corporate positions.
The exercise bike company is also winding down the development of the Peloton Output Park, its planned $400 million manufacturing plant that was being built in Ohio.
The Wall Street Journal, which reported the story first, notes that the hiring of a new CEO likely indicates that Peloton is not exploring a sale—despite reports of interest from buyers like Amazon, Nike and Apple—at its current stock price which has slumped nearly 80% in the past year.
Tangent
Foley lost his billionaire status in November as his net worth slumped to around $900 million, Forbes reported. Foley’s wealth has continued to slide downwards since then, with his net worth sitting around $400 million last month.
Key Background
Reports in January suggested activist investor Blackwells Capital was pushing the company to remove Foley as CEO and explore a possible sale to a company like Apple, Nike, or Sony. Over the past year, Peloton’s market cap has slid from a peak of $50 billion to just under $10 billion as demand for its exercise bikes and treadmills has dropped. The fall in demand reportedly forced the pandemic-era stock market darling to temporarily halt production of its exercise bikes and treadmills last month. Blackwells reportedly blames Foley for the company’s recent woes and has criticized him for inconsistent pricing and manufacturing strategies. Despite this, the decision to sell Peloton would solely rest on Foley and other company insiders who own Class B shares, which give them 80% of the company’s voting power.
Chief Critic
Reacting to Tuesday’s development, Blackwells Capital Chief Investment Officer Jason Aintabi said: “Peloton CEO John Foley naming himself Executive Chairman and hiring a new CFO does not address any of Peloton investors’ concerns. Mr. Foley has proven he is not suited to lead Peloton, whether as CEO or Executive Chair, and he should not be hand-picking directors, as he appears to have done today.”
What To Watch For
The company’s stock price rose 20% Monday amid reports that the company was drawing interest from potential buyers including Amazon, Nike and Apple. It’s unclear how the change in the company’s leadership and its cost-cutting measures will impact this reported interest. Shares were down almost 7% at one point in pre-market on Tuesday.
Further Reading
Peloton CEO John Foley to Step Down, Become Executive Chair (Wall Street Journal)
Apple, Amazon Or Nike? Peloton Stock Surges, But Here’s What Experts Say About A Takeover (Forbes)
