Peloton, the bike company that was on a roller coaster ride during the pandemic, is now on a downward slide. On Tuesday, co-founder John Foley announced that he would no longer remain as the CEO of the company. The firm is also laying off close to 3,000 workers. Barry McCarthy, former CFO at Spotify and Netflix will be the new chief executive. The Wall Street Journal was the first to report the news.
Earlier this week, there were media reports that the bike maker would be sold to a big tech company but Tuesday’s announcement dashes such hopes, in the near future. Activist investor Blackwells Capital had asked for Foley’s ouster, last month. They are reportedly not happy about the step taken, on Tuesday as Foley has stepped down from the post of CEO but remains as its executive chairman. The investor said that it would review Peloton’s books and company records, as it has a right to do so.
During the pandemic, as people had to stay home, Peloton shares rose to dizzying heights reportedly up to 400 percent as the demand was higher than the production. The company made huge expansion plans of a $400 million factory in Ohio. As the company lost many of its customers after a successful vaccination drive by the Biden administration, demand of its bikes fell. Many people started visiting gyms and the demand for home workout exercise equipment dramatically fell.
The decrease in sales has let to the company laying off workers. The workforce will be decreased by about 2,800 workers. Peloton said that trainers would not be a part of the job cuts and that they would continue to host virtual workouts.
The company also said that it would reduce its planned capital expenditures by roughly $150 million this year. After the announcement on Tuesday, Peloton shares fell by 6 percent in premarket trading.
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