After the boom in the wake of the corona pandemic, the downturn follows: The fitness equipment specialist Peloton is cutting around a fifth of the jobs with 2800 jobs and stopping the construction of a factory in the USA.

Peloton emphasized that coaches are not affected.

Co-founder John Foley is also stepping down as CEO, and he is succeeded by Barry McCarthy, who used to be CFO at streaming specialists Netflix and Spotify.

Foley was already under pressure: The activist investor Blackwells Capital called for his resignation and accused the management team of mismanagement.

At the same time, he and the early team remain in control thanks to shares with 20 times more voting rights than ordinary investors.

With the change in management and the austerity measures, the company wants to get out of its crisis.

With McCarthy's rise, expect the focus to shift away from hardware sales and toward subscription revenue.

Because at the beginning of the pandemic, many customers faced closed gyms, the company's exercise bikes and treadmills gained popularity.

As a result of the easing of corona restrictions, demand fell sharply, which Peloton obviously overestimated.

In November, the New York company had to slash its sales forecast for the fiscal year ending in mid-2022 – by up to a billion dollars.

Peloton remains under price pressure

Since the market value of Peloton collapsed from around 50 billion to 8 billion dollars in the face of the problems, according to media reports, Amazon and Nike, among others, were considering takeover bids.

The change of boss and the austerity course should also indicate that Peloton wants to secure its future as an independent company.

The austerity course and measures for more efficiency should reduce the costs by 800 million dollars annually.

In addition, Peloton is capping capital expenditures by $150 million this year.

The future boss McCarthy criticized in the “Wall Street Journal” that Peloton had let its costs get out of hand “as if Covid were the new normal”.

When Peloton couldn't ship its devices fast enough early in the pandemic, the company decided to build a $400 million factory in Ohio.

The construction freeze now entails restructuring costs of 60 million dollars.

In order to be leaner, Peloton no longer wants to operate larger parts of the logistics itself.

In an unusual move, Peloton first announced the measures in interviews by Foley and McCarthy with the Wall Street Journal, hours before the official announcement.

In addition, the US company published its forecasts for this year earlier than planned on Tuesday.

Peloton lowered its expectations significantly: instead of $4.4 to $4.8 billion in sales, it now expects $3.7 to $3.8 billion this year.

The Peloton share, which recently jumped by around a fifth in view of the takeover speculation, temporarily fell by a good two percent after the company plans were announced in pre-market US trading.

Peloton also cut its own flesh last year with a price cut.

In August, the price of the original training bike was cut by a fifth.

Customers then increasingly preferred it to the more expensive and for Peloton more lucrative new version.

Before the price drop, the two models had sold about equally well.

After that, the older device dominated with around 75 percent.

That depressed sales.

At the same time, Peloton is under price pressure because other manufacturers are fighting for the market with some cheaper devices.