Two weeks ago, Peloton CEO and co-founder John Foley challenged a CNBC report saying the company was in dire straits and that employees should start fixing their resumés. He alleged that a mole had leaked info without the proper “clarity and context” needed to understand what was happening at Peloton. Furthermore, “layoffs would be the absolute last lever we would ever hope to pull,” he wrote in his crisis press release.
But it now looks like the CNBC and the mole had it right all along. As of this morning, Foley has been asked to vacate the company as its CEO. Barry McCarthy, former CFO of Netflix and Spotify, will be Foley’s replacement. In addition, 2,800 positions were eliminated. (This number reflects about one-fifth of Peloton’s workforce.) The newly laid-off employees won’t be left completely empty-handed, though: they were given a free 12-month subscription as part of their severance packages while “they explore their career path post-Peloton,” wrote Foley in his email per the New York Post.
However, Foley will still remain with the the $1.8 billion exercise equipment company in the more dubious role of executive chairman. “As I transition out of the C.E.O. role and into that of executive chair,” he said on a conference call earlier today, “I could not be more excited to partner closely with Barry.”
Foley’s continued association with Peloton, despite the its financial woes and especially in light of his shift within the company, are a strong indicator of the organization’s intent to sell. Amazon, Nike, and a number of private equity firms were on a short list of interested buyers at one point in time. But the current shakeup plus a stock price jump of 26% have given those parties some pause to see how Peloton’s attempted turnaround plays out.
And Peloton is still working to restore its brand image as well. The company was involved in a series of tragic accidents, including the death of a six-year-old, which led to a widespread recall. In fact, two fictional characters on two separate shows (Mr. Big from HBO Max’s And Just Like That… and Mike “Wags” Wagner of Showtime’s Billions) both suffered heart attacks while exercising on Peloton equipment.
Wagner even told his EMT, “I’m not going out like Mr. Big.” Well, neither is Peloton for the time being. Let’s see if the rest of 2022 gives any more of the company’s shareholders cardiac arrest – real or not.