Peloton’s new CEO says a sale is not in the works

Last week was an eventful week for Peloton: it got a new CEO, investors unleashed their fury on outgoing CEO John Foley, 2,800 employees were laid off, and then some of those employees crashed. At the heart of the drama was a big question as to whether new CEO Barry McCarthy had been recruited to get Peloton in shape for a sale as the company’s value plummeted to $8 billion from a $50 billion pandemic. However, in a Financial times interview, McCarthy has officially rejected the idea for the “foreseeable future.”

“If I thought it was likely that the company would be acquired in the foreseeable future, I can’t imagine moving across the country would be a rational act. There are many other things I could do with my time that are quite lucrative than hanging out with a company that is about to be sold,” McCarthy said. The Financial Timesreferring to the fact that he will be moving from California to New York for the job.

McCarthy emphasized that Peloton had room to grow and that he would focus on the content because Peloton is a “connected fitness company, not a bike company.” (Something product critics and analysts have been saying since day one.) This ties into McCarthy’s background. Before becoming CEO of Peloton, McCarthy was the Chief Financial Officer at Netflix and Spotify (as well as Chief Operating Officer at the ill-fated, poorly remembered mobile payment app Clinkle). Following McCarthy’s appointment, Foley praised his experience with digital streaming services and subscription business models. In the FT During an interview, McCarthy also hinted that Peloton’s expensive $39 monthly membership fee could be replaced with an entirely different pricing structure.

It also follows the tone set during Peloton’s Q2 earnings call last week, where Foley and Peloton’s chief financial officer Jill Woodworth repeatedly emphasized that the company would pursue “continued growth.” However, this does not mean that Peloton has completely given up on the hardware. McCarthy told the Financial times its strategy involves creating “product line extensions” to entice customers to own multiple Peloton devices.

The report also notes that Peloton works separately on a connected rowing machine, as well as on a “dedicated strength-training system.” The first will reportedly feature the same tablet as the Bike Plus, use magnetic resistance and provide feedback. The long-rumored rower is believed to be in the testing phase and could be announced before or after Peloton’s annual “Homecoming” event in May.

The strength training system would be Peloton’s answer to rival Tonal, but according to FT, looks like it’s unrelated to the upcoming Peloton guide. Tonal is a strength training system that relies on electromagnetic resistance cables and is installed directly into a user’s wall. Peloton’s rumored strength-training device will instead be linked to television and won’t be released for a while.

All of this seems to be putting the kibosh on a Peloton sell-off, at least in the short to medium term. However, McCarthy acknowledged that the decision to sell is not really his. That’s from shareholders. More specifically, a group of company insiders that own 80 percent of Peloton’s voting rights, including former CEO – and now executive chairman – John Foley. McCarthy also said he was “confident that a large percentage of the vote will be cast in favor of my leadership” and cited that as the reason why he agreed to take the job.

The Financial Times however, the interview also made it clear that Foley isn’t going anywhere either. While McCarthy tried to underline his failure, he also said Foley would continue to play “an instrumental role” in Peloton’s products, strategy and vision. The two have also publicly sung each other’s praises for the past week and appear to be forming a united front for now. Foley told The Wall Street Journal that McCarthy was “perfectly suited” for the job, while McCarthy said the two were “completely mature” together. This time, McCarthy indicated he wouldn’t leave Foley behind, and McCarthy said he intended to “suck every ounce of superpower out of him” as long as Foley allowed him to.

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