Peloton CEO John Foley plans to step down and become executive chair after a decline in demand and a reported production halt led to a steep sell-off of the company's shares, the exercise bike maker said Tuesday.
The big picture: Peloton also plans to cut about 2,800 jobs, including about 20% of its corporate workforce. But the company said those layoffs won't affect its roster of fitness instructors.
- Foley, a former Barnes & Noble executive who co-founded Peloton over 10 years ago, will be replaced as CEO by former Spotify and Netflix CFO Barry McCarthy.
- The company also made some board changes, including the departure of former TCV partner Erik Blachford and said it will halt the development of an Ohio manufacturing facility that would have employed 2,000 people.
- Peloton's value had fallen dramatically after a reported cut in production levels before rebounding in recent days over reports that Amazon and others may be interested in purchasing the company.
Between the lines: Foley and other company insiders control more than 80% of Peloton's voting shares, meaning he would likely have veto power over any deal.
What they're saying: "I have always thought there has to be a better CEO for Peloton than me," Foley told the Wall Street Journal, which first reported the move. "Barry is more perfectly suited than anybody I could’ve imagined."
- "We are open to exploring any opportunity that could create value for Peloton shareholders," he added.
Last month, Blackwells Capital, an activist investor with less than a 5% stake in Peloton, called for Foley to be fired and for the connected fitness company to consider seeking a strategic buyer.
- But the fund was unimpressed with the new move, per a letter, notably because Foley remains in charge as executive chairman, and continued to "demand" a sale process.
The bottom line: The company isn't officially on the block, but it seems more open to offers.
Go deeper: Peloton's wild ride and possible buyers
Editor's note: This story has been updated to clarify Peloton’s plan to cut 2,800 jobs, including 20% of its corporate workforce. An earlier version of the story incorrectly implied the 2,800 jobs represented 20% of the corporate workforce.
