May 24, 2021 Peloton Interactive’s (PTON) – Get Peloton Interactive, Inc. Grade A Report Then-President William Lynch had exciting news.
Lynch has announced that the interactive fitness company plans to build its first purpose-built Peloton factory in the US, the Peloton Output Park or “POP” in Troy, Ohio.
‘We have big plans’
“We’ll be breaking ground later this summer, and we have big plans to make pop,” Lynch said in a company post.
These big plans include the use of renewable energy, adding more than 2,000 jobs to the region, and “having the best industrial technology to produce the highest quality fitness products faster and safer.”
“We are excited to begin this process and 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—quickly.
By February of this year, the excitement had worn off. POP did appear, but not in the way the company expected.
After a $266.5 million loss in the second quarter, Peloton announced a “major” restructuring that saw co-founder and CEO John Foley step down and cut 2,800 jobs.
Lynch went from president to full-time board member, Foley said, “and we also decided to stop development of the Peloton Output Park.”
“We have this.”
Things looked more serious for Peloton on May 5, when The Wall Street Journal reported that Peloton was looking to sell about 20% of its shares. Shares fell to record lows.
The news received a backlash from fans, who took to social media to express concerns about Peloton’s future.
“Hopefully they can get these investments successfully and bounce back before reaching $1.00,” one of the people said. “As a novice trader, I had a lot of trouble.”
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“Love my Peloton…hate this stock,” said another commenter.
During the conference call, Foley acknowledged that “we made mistakes along the way.”
We scaled the business too quickly to meet market demands,” Foley said, according to the call transcript, “and we overinvested in certain areas of the business. “
“We have this,” Foley said. “I own this and we’re responsible for ourselves. Starting today.”
Foley makes way for former Spotify CFO Barry McCarthy (SPOT) – Get Spotify Technical SA Report and Netflix (NFLX) – Get the Netflix, Inc. report.
Foley, however, will remain executive chairman and is part of a group that controls the company with super-voting stock.
The effect of Peloton falling from the sky is amazing. On May 6, 2021, the company’s stock closed at $83.78 per share.
“A close group of insiders”
A year later, shares were down 81.3% at $15.70. The company’s market capitalization on Friday was $5.206 billion, down from $37.22 billion on June 30, 2021. The market cap has halved since December 31.
“The cheapest thing you can buy from peloton right now is their stock,” one commenter said on Twitter.
Peloton shares tumbled and briefly suspended trading on the Nasdaq in April after the company said it would raise prices on its connected fitness plans for the first time in eight years, while cutting costs on its iconic bikes and treadmills.
Blackwells Capital LLC calls on the company to sell itself to buyers like Amazon (AMZN) – Get Amazon.com, Inc. Reportssaid in a statement, “As long as a close-knit group of insiders has proven itself unable to create value and continues to exercise voting power that far exceeds its financial interests, Peloton will continue to be undervalued.”
“No shareholder should expect Mr Foley to still sit at the top of the management pyramid or control the board through his supervoting power,” Blackwells chief investment officer Jason Aintabi said in a statement. He lost the right to hold both positions when he destroyed $40 billion in shareholder wealth.”
Peloton, which did not respond to a request for comment, is scheduled to report third-quarter earnings on May 10.
“Peloton won’t bottom out until they come out with a bike that also powers your home so you can trade their stock while you pedal,” one person tweeted.