Peloton’s Founder Stepping Down as CEO Following Company Struggles
The Pandemic Boom Has Fizzled
Peloton (PTON) exploded in popularity and name recognition early on in the pandemic. With millions of people stuck at home and unable to partake in traditional exercise, the company’s bikes and virtual classes offered a combination of fitness and community. Peloton’s valuation rose significantly, but its fortunes have changed. Up until recently the stock was trading below its 2019 IPO price of $29 per share.
Analysts note the company has seen subscriber growth stagnate, and recently production was halted due to lagging demand for Peloton bikes and treadmills. Plainly stated, gyms are filling up again as pandemic-related restrictions ease, and that means fewer people buying Peloton products. The stock popped on Monday amid rumors of a possible buyout, and now the company is taking proactive steps.
Co-Founder Stepping Down, New CEO Moves In
On Tuesday, Peloton confirmed reports that co-founder and outgoing CEO John Foley would be stepping down as part of a larger restructuring. Former Spotify (SPOT) and Netflix (NFLX) CFO Barry McCarthy will become Peloton’s new chief executive. The New York-based company also plans to eliminate 2,800 jobs in a cost-cutting measure, as it reports a most-recent quarterly loss of $439 million and downcast revenue guidance.
Both Foley and McCarthy have expressed confidence in the company’s future from this point on. They say Peloton is better suited to executive leadership that understands how to maximize the content-driven subscription model, as opposed to marketing and product development. Two new directors are being added with backgrounds in supply-chain management and branding.
Where Peloton Goes From Here
Peloton’s share price soared on Monday as word hit the market that Nike (NKE) and Amazon (AMZN) could be interested in acquiring the company. While some investors have called for the company to sell itself, analysts say the decision to name a new CEO could indicate plans to remain as a standalone company. From a different angle, Peloton may not be interested in selling right now given the stock’s steep decline.
Peloton says reducing costs is the focus for 2022, with goals to cut annual spending by $800 million and capital expenditures by $150 million. The $400 million development of Peloton Output Park, an Ohio factory, is also being wound down. Executives say the company grew too fast without realizing COVID-19-era lockdowns were not the “new normal.” Investors had been looking for clarity as Peloton had been forecasting cost-cutting moves, but the restructuring’s long-term impact remains to be seen.
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