On May 24, 2021, Peloton Interactive’s (PTON) – Get Peloton Interactive, Inc. Class A Report then-President William Lynch had exciting news.
Lynch announced the interactive fitness company’s plan to build Peloton Output Park, or the “POP”, its first dedicated Peloton factory in the U.S. in Troy Township, Ohio.
‘We Have Big Plans’
“We’ll be breaking ground later this summer and we have big plans to make POP, pop,” Lynch said in a company posting.
Those big plans included using renewable energy sources, adding more than 2,000 jobs to the region and “having the best industrial technology to make the highest quality products in fitness even faster and safer.”
“We’re thrilled to start this process, and so excited to create a Peloton campus in the midwest!” Lynch said.
On August 9, Peloton officially broke ground on the POP facility.
But then things started to change–rapidly.
By February of this year the thrill was gone. POP had indeed popped, but not in the way the company had intended.
After posting a $266.5 million second-quarter loss, Peloton announced a “major” restructuring that saw co-founder and CEO John Foley step down and the elimination of 2,800 jobs.
Lynch went from president to full-time board member and, Foley said, “we’ve also made the decision to wind down the development of Peloton Output Park.”
‘We Own This.’
The company’s situation looked even more serious on May 5 when the Wall Street Journal reported that Peloton was looking to sell a stake of about 20%. Shares fell to an all-time low.
The news was badly received by fans who began to express their worries about the future of Peloton on social media.
“Hope they succeed in securing those investments and bounce back before they reach to $1.00,” one person said. “I’m in deep trouble as a novice trader.”
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“Love my Peloton…hate the stock,” another commenter said.
During the conference call, Foley acknowledged that “that we have made missteps along the way.”
To meet market demand, we scaled our operations too rapidly,” Foley said, according to a transcript of the call, “and we over-invested in certain areas of our business.”
“We own this,” Foley said. “I own this, and we are holding ourselves accountable. That starts today.”
Foley stepped aside to make room for Barry McCarthy, a former chief financial officer for Spotify (SPOT) – Get Spotify Technology SA Report and Netflix (NFLX) – Get Netflix, Inc. Report.
However, Foley will remain executive chairman and is part of a group that controls the company with super-voting stock.
Peloton’s fall from the sky has been quite stunning. On May 6, 2021, the company’s stock closed at $83.78 a share.
‘A Close-Knit Group of Insiders’
One year later, the shares were down 81.3% to $15.70. The company’s market capitalization stood at $5.206 billion on Friday, a long way down from the June 30, 2021 figure of $37.22 billion. Market capitalization has been halved since December 31.
“The cheapest thing you can buy from peloton is currently their stock,” a commenter said on Twitter.
In April, Peloton shares tumbled and were briefly suspended from trading on the Nasdaq, after the company said it would increase the price of its connected fitness programs for the first time in eight years, while slashing the cost of its signature bikes and treadmills.
Blackwells Capital LLC, which has called for the company to sell itself to a buyer like Amazon (AMZN) – Get Amazon.com, Inc. Report, said in a statement that “Peloton will continue to be poorly valued for as long as a close-knit group of insiders, who have proven themselves incapable of creating value, continue to wield voting power far in excess of their economic interest.”
“No shareholder should want Mr. Foley to still sit atop the management pyramid or control the Board through his super voting-stock,” Jason Aintabi, Blackwells’ chief investment officer said in a statement. “He lost his entitlement to both positions when he destroyed $40 billion of shareholder wealth in less than a year.”
Peloton, which did not responded to a request for comment, is scheduled to report third-quarter earnings on May 10.
“Peloton won’t bottom until they launch a bike that simultaneously powers your home so you can trade their stock while you pedal,” one person tweeted.
Source: https://www.thestreet.com/technology/peloton-wants-to-believe-in-life-after-lockdown?puc=yahoo&cm_ven=YAHOO&yptr=yahoo