© Reuters. FILE PHOTO: A stationary bicycle inside of a Peloton store is pictured in the Manhattan borough of New York City, U.S., January 25, 2022. REUTERS/Carlo Allegri/File Photo
(Reuters) -Peloton Interactive Inc plans to replace its chief executive officer and overhaul its board, the Wall Street Journal reported on Tuesday, as the exercise bike maker faces investor pressure following a sharp slump in its valuation.
Co-founder John Foley will step down as CEO and will become the executive chair, while Barry McCarthy, the former chief financial officer of Spotify Technology SA (NYSE:SPOT) and Netflix Inc (NASDAQ:NFLX), will take the helm, the report added.
Foley attracted the ire of activist investor Blackwells Capital as the company has struggled to maintain the breakneck growth that helped its valuation swell to $52 billion in early 2021.
The investment firm called for his removal and even urged the company to sell itself, blaming the stock’s underperformance to “gross mismanagement”, Foley’s poor decision making and lack of credibility.
Analysts have, however, said the dual-share class structure may be a deterrent to a takeover approach.
Last week, Reuters reported that Peloton (NASDAQ:PTON) has drawn interest from potential buyers including e-commerce giant Amazon.com Inc (NASDAQ:AMZN), citing a person familiar with the matter.
Shares of the company were down 9% in premarket trading on Tuesday. They had gained about 21% on Monday following reports of the buyout interest.
Peloton’s sales boomed during COVID-19 lockdowns, with many snapping up home fitness equipment. But fortunes began to fade as vaccinations increased, gyms reopened and rivals offered competitive products.
In November, the company hinted that demand for its exercise bikes and treadmills was slowing faster than expected, and its market capitalization since then has shrunk to about $8 billion.
Peloton will also cut roughly 2,800 jobs, affecting 20% of its corporate positions, the newspaper https://on.wsj.com/3HDHLtP reported, adding the reductions will not affect its fitness instructor roster or content.
The company will also wind down the development of its Peloton Output Park, the $400 million factory that it said in May it was building in Ohio, the Journal said.
Last month, Blackwells urged the company’s board to fire Foley and put itself up for sale to a buyer like Walt Disney (NYSE:DIS) Co, Apple Inc (NASDAQ:AAPL), Sony (NYSE:SONY) Group or Nike Inc (NYSE:NKE).
Peloton, which is expected to report its second-quarter results after market close on Tuesday, did not immediately respond to a Reuters request for comment.