Peloton Has A New Leader

Sebastien Callebaut -

Peloton Plans To Replace Its CEO And Slash Costs

According to The Wall Street Journal, Peloton co-founder John Foley, who has overseen the firm for its entire 10-year history, is stepping down as CEO and will become executive chairman. Barry McCarthy, the former CFO of Spotify and Netflix, will take over as CEO and President of Peloton and join the board of directors.

  • To help cope with the reduction in demand and expanding losses, the fitness company will cut around 2,800 jobs
  • Peloton's instructor roster and content will not be affected by the cuts

Winding Down Operations

Peloton now expects revenue in the range of $3.7 billion to $3.8 billion in fiscal 2022, down from $4.4 billion to $4.8 billion previously. The business also stated that it expects to have around 3 million linked fitness subscribers by the end of the year. It had previously estimated that it will have 3.35 million to 3.45 million people.

  • Peloton plans to save $800 million in yearly costs and $150 million in capital expenditures this year, according to the company
  • It intends to wind down the construction of its Peloton Output Park, a $400 million facility in Ohio, by the end of the year
  • It also plans to downsize its delivery teams and the quantity of warehouse space it owns and operates, according to the company

Selling Itself

Around a week ago, activist Blackwells Capital, which owns less than 5% of Peloton, submitted a letter to the board of directors pushing Foley to resign as CEO and asking the firm to consider selling itself. Amazon and Nike have been mentioned as potential suitors in recent reports.

  • While many investors had been dissatisfied with Peloton as its stock price dropped, experts highlighted that the firm might be tough to target because it had two classes of stock, effectively allowing insiders to control it
  • As of September 30, Foley and other Peloton insiders held a combined voting control of about 80%
  • Foley was accused by Blackwells of leading with "unbridled optimism rather than discipline" and was held responsible for ballooning costs, poor decision-making, and bad capital allocation
  • Blackwells has also requested that its books and records be reviewed to see if the company's dual-class share structure contributed to the lack of control

Disclaimer

Please note that this article does not constitute investment advice in any form. This article is not a research report and is not intended to serve as the basis for any investment decision. All investments involve risk and the past performance of a security or financial product does not guarantee future returns. Investors have to conduct their own research before conducting any transaction. There is always the risk of losing parts or all of your money when you invest in securities or other financial products.

Credits

Photo by Andrew Valdivia on Unsplash.