Peloton's Stock Rollercoaster Amid COVID, CEO Resigns and 2,800 Laid Off Due to Management Struggles

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] U.S. home fitness company Peloton has decided to resolve its management difficulties by having its CEO resign and laying off 2,800 employees. Peloton expanded its business based on virtual coaching classes using online streaming during the COVID-19 pandemic, but as lockdowns around the world have gradually been lifted and fitness facilities have reopened, demand has sharply declined, putting the company in a difficult position.

According to the Wall Street Journal (WSJ) and others on the 8th (local time), Peloton announced that John Foley, co-founder and CEO, will step down from day-to-day management and move to chairman of the board. Barry McCarthy, who previously served as CFO at music streaming company Spotify and video streaming platform Netflix, has been nominated as the new CEO.

Peloton also plans to lay off about 2,800 office workers, which is 20% of its staff, and reorganize its board. By cutting costs, the company aims to reduce annual expenses by approximately $800 million (about 957 billion KRW) and cut capital expenditures by about $150 million this year.

The reason Peloton has taken these measures is to address the recent management difficulties it has faced. Peloton, a manufacturer of indoor bicycles, emerged as a representative beneficiary of the pandemic, but demand plummeted as COVID-19 lockdowns were lifted, causing its stock price to fall sharply. Peloton’s stock price, which rose to $162.72 in December 2020, dropped to the $20 range and has recently risen slightly. Its market capitalization peaked at $50 billion but recently shrank to $8 billion.

Last month, activist investor Blackwells Capital demanded that Peloton fire its CEO and consider a sale, and recently U.S. media reported that Amazon and Nike have entered the bidding for Peloton. The market expects that acquiring Peloton would secure customers, data, and technology related to the health and wellness market.

However, Blackwells insisted even after the announcement of founder Foley’s resignation that he should completely leave the company instead of moving to chairman. They also released a report estimating that if Peloton is sold, it could be sold at a value of $65 per share. Founder Foley, along with other executives, holds more than 80% of the company’s voting rights.

Following Peloton’s announcement, the stock price closed at $37.27, up 25.28% from the previous day.

This content was produced with the assistance of AI translation services.