Peloton Replaced Its CEO and Is Laying Off 2,800 People
Exercise equipment manufacturer Peloton is giving new meaning to slimming down.
With sales of its home fitness equipment in a tailspin and unhappy investors calling for blood, the company replaced its CEO, John Foley, Tuesday and said it will lay off 2,800 people, or 20% of its workforce.
Stop Spinning Your Wheels, Make a Deal
For a company all about pushing ahead, Peloton has spent the last year pedaling backward. Early in the pandemic, its stock soared and equipment sales boomed, making it a Wall Street darling. But a subsequent drop in sales drove its market cap down from $50 billion a year ago to $8 billion last week.
Rowdy shareholder and activist investor Blackwells Capital has demanded for weeks that Peloton turf Foley, a cofounder. The firm pointed to Peloton’s declining sales — the company’s revenue forecast of $3.7 billion for 2022 is down from an earlier $4.8 billion estimate — as one of many signs that management has lost its grip on the handlebars. Blackwells has also pushed Peloton to consider selling itself, and reports that the company is taking the idea seriously has led to investor optimism for the first time in a while:
- Peloton’s stock rallied as much as 36% on Tuesday after the CEO change, a day after surging 31% on news it is exploring takeover options.
- Amazon and Nike have expressed interest in acquiring Peloton, according to The Wall Street Journal, while Wedbush analyst Dan Ives wrote “we would be shocked if Apple is not aggressively involved in this potential deal process.”
Blackwells released estimates Tuesday that Peloton could sell for $65 or more per share — more than double its current trading price.
Not Good Enough: While Peloton’s new CEO Barry McCarthy, a respected Silicon Valley veteran with successful tours as CFO of Spotify and Netflix, presents a clean break from the company’s founders, Blackwells said Foley — who is moving to the post of executive chairman — should leave entirely. But Blackwells only controls about 5% of Peloton shares while Foley, his wife, and company insiders hold 60%.