Peloton (NYSE: PTON) stock is trading lower in US premarket price action today after the company’s co-founders John Foley and Hisao Kushi left the company.

Foley had exited as the company’s CEO earlier this year and has now quit as chairman with immediate effect, while Kushi will continue to remain the company’s Chief Legal Officer until October 3.

In the release, Foley said: “Now it is time for me to start a new professional chapter. I have passion for building companies and creating great teams, and I am excited to do that again in a new space.”

After Foley’s exit as CEO, Barry McCarthy took over as the role and has been driving the turnaround efforts.

John Foley Exits as Peloton chairman amid Sagging Stock

Peloton stock is down sharply this year and is among the worst performing names. It was also among the worst performing stocks in 2021 and trades well below its IPO price. In his prepared remarks, McCarthy praised both Foley and Kushi and said: “I would like to offer my gratitude to John and Hisao for their shared vision, dedication, and passion for Peloton.”

He added: “Through their hard work, they have given the world the connected fitness industry and created a platform that empowers each of us to be the best version of ourselves. We are indebted to them for their countless contributions.”

Meanwhile, McCarthy has been driving several strategic changes at Peloton. The company have announced that it will partner with third-party logistics service providers to lower its costs, adding that the decision will lead to job losses.

McCarthy is trying to turn around Peloton

As part of the restructuring, Peloton has fully exited the manufacturing business and will rely only on third-party manufacturers.

Peloton also scrapped its Ohio factory, where it was set to invest $400 million to manufacture products in the US – they will now be selling the plant in order to raise cash.

Peloton has also started selling its equipment on Amazon. Customers buying Peloton equipment on the site have the option to either opt for self-assembly or seek the help of an expert as an extra service. Currently, the company would not charge extra for the delivery and the assembly service.

Peloton has made it clear multiple times that preserving cash was its top priority and is planning to become free cash flow positive in the back half of the 2022 fiscal year.

However, corporate turnarounds are not easy and McCarthy has said so on several occasions. The company’s losses have been widening and it posted a negative EBITDA of $288.7 million in its fiscal fourth quarter of 2022. Its revenues also fell 28% YoY to $678.8 million.

Many Analysts See PTON Stock as Buy

While PTON stock has plunged, many analysts continue to remain bullish and have maintained their buy rating on Peloton stock. JPMorgan is bullish on PTON as the company transitions from a fixed to a variable cost structure. Notably, while Peloton’s equipment sales are coming down, its subscription revenues are rising.

It posted subscription revenues of $383.1 million in the most recent quarter which was ahead of the $295.6 million that it got from product sales – it was the first time in the company’s history that its subscription revenues surpassed product sales.

Barclays also reiterated its buy rating on PTON as it sees lower churn. Deutsche Bank reiterated the stock as a buy and said: “Taking a step back, we think the key reason to be bullish on PTON from here has more to do with the potential for the company to open up new revenue streams via strategic partnerships and add-on services, many of which might be little more than abstracts on a white board or initial conversations with potential future partners at this point.”

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