Peloton Co-Founder John Foley Steps Down As CEO

Peloton is overhauling its leadership and slashing jobs amid reports that it is the focus of potential takeover bids. 

The connected fitness company announced Tuesday that Peloton co-founder John Foley is stepping down as CEO and will be replaced at the helm by former Spotify executive Barry McCarthy. Foley will become executive chair.

Moving to cut costs, Peloton also said it would lay off 2,800 workers across its global operations. The cuts will include corporate, warehouse and delivery jobs. 

The management change comes as unconfirmed reports swirl that a range of big-name suitors may be weighing a bid for Peloton, whose financial performance has flagged over the last year after its stock soared in 2020 during the early days of the COVID-19 pandemic.

Peloton shares surged on Monday on reports that Apple, Amazon, Disney, Microsoft or Nike may make a play for the maker of internet-enabled exercise bikes and treadmills. Since late 2020 Peloton's stock price has sunk nearly 80%, tumbling from a high of nearly $170 to $29.

The company is scheduled to release its second-quarter results before the start of trading on Monday. 

"If it wasn't before, Peloton is now a business in crisis mode," Neil Saunders, an analyst at GlobalData, said in an email, adding that investors have lost confidence in Foley. "Its decision to sacrifice John Foley, who will step down as chief executive, is the latest in a long string of maneuvers as it scrambles to get the business back on the rails."

McCarthy, who formerly served as chief financial officer at Spotify and Netflix, will succeed Foley as president and CEO effective Wednesday as well as join Peloton's board of directors.

"Since founding Peloton a decade ago, we've grown this brand to engage and motivate a loyal community of more than 6.6 million members," Foley said in a statement. "I'm incredibly proud to have worked with such talented teammates over the years who have helped me build Peloton into what it is today, and I'm confident that Barry is the right leader to take the company into its next phase of growth."

Wall Street equity analyst Dan Ives of Wedbush Securities thinks Foley's exit as CEO increases the odds that Peloton is acquired.

"We believe Foley leaving makes it more likely that Peloton ultimately sells the company, and the board clearly has major decisions to make in the days/weeks/months ahead," he said in a report. "If a bidding process begins, we view Apple as the likely acquirer due to the clear strategic fit with its healthcare/fitness/subscription initiatives while Amazon and Nike among others could be potential bidders in the mix."