Peloton is in crisis mode, and in order to save the company, it is pushing for cost-cutting measures such as letting go of 2,800 employees, slashing millions of dollars in annual costs, and replacing its CEO in its attempt to win back the confidence of its investors.
Peloton CEO Gets Replaced
According to The Wall Street Journal, the 20% job cut will not affect the company's roster of instructors or fitness content. The exercise equipment company hopes that these changes will increase its profitability.
Peloton employed 6,742 people in the United States last year. That is more than double the 3,281 employees it counted in 2020.
The company said it expects to reduce around $800 million in annual costs and reduce capital expenditures by almost $150 million this year.
Peloton has lost many customers, and demand for its equipment has decreased post-pandemic.
Last year, Peloton blamed Apple's app tracking transparency for losing new customers.
The company was once valued at $50 billion, but it was reported that it is now only valued at $8 billion as of last week.
The company's co-founder, John Foley, will be replaced as CEO by the former CFO of Spotify and Netflix, Barry McCarthy. Foley will now be the company's executive chair.
Foley told The Wall Street Journal in an interview that he believes that there is someone who could do a better job as the company's CEO. He added that Barry was suited for the position, which was why he decided to step down.
The company's other cost-cutting measures include delaying the construction of its $400 million factories in Ohio, reducing its delivery teams, and reducing its warehouse space. These measures will save them almost $1 billion this year alone.
The company's shares fell around 10% in premarket trading on Feb. 8. On Feb. 7, its stock was down 31%, giving Peloton a market value of only $9.7 billion.
According to CNBC, the company predicted its preliminary quarterly revenue and subscriber figures back in January, and the numbers were great. However, today's announcement included a lower forecast for the results this year.
The company cut its fiscal 2022 revenue estimate from $4.4 billion to $4.8 billion, down to a range of $3.7 billion to $3.8 billion.
Peloton's president, William Lynch, is also expected to step down from his position, but he will remain as part of the board.
Peloton For Sale
As for the rumors that Peloton is for sale, Foley stated that they are not closing any doors, and they are keeping an eye on all opportunities as they aim to create value for their shareholders.
Foley previously controls 80% of the company's voting power, so if the company is really for sale, the decision will be down to him.
Amazon was reported to be interested in buying Peloton, as the e-commerce company consulted its advisers about the potential purchase.
However, Amazon was not the only one that was interested. According to The Financial Times, Nike is also thinking of buying the exercise equipment company.
Neither Amazon nor Nike has talked to Peloton about any offer, which could mean that it may not push through at all.
Related Article: Peloton Under Investigation Due to Several Injuries Involving its Equipment
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Written by Sophie Webster
