Business

Peloton Ex-CEO John Foley Sells $50 Million in Stock to Michael Dell's Investment Firm

Michael Nagle | Bloomberg | Getty Images
  • Peloton co-founder and ex-CEO John Foley has sold about $50 million in stock to an investment firm backed by Michael Dell, MSD Partners, according to a securities filing.
  • The sale involved about 1.92 million shares, the Wednesday filing said.
  • Foley still owns enough stock after the sale to maintain effective control of Peloton.

Peloton co-founder and ex-CEO John Foley has sold about $50 million in stock to an investment firm backed by Michael Dell, MSD Partners, according to a securities filing.

The sale involved about 1.92 million shares, the Wednesday filing said. Foley still owns enough after the sale to maintain effective voting control of Peloton.

Foley stepped down from the CEO role in February, and was replaced by former Netflix and Spotify executive Barry McCarthy. The Peloton co-founder transitioned to executive chairman, and McCarthy has said the duo will continue to work closely together.

The shakeup happened as Peloton faced slowing momentum for its connected fitness equipment and mounting expenses, due to a series of missteps and poor investments during the Covid pandemic.

McCarthy used to sit on the board of a blank-check company also backed by MSD Partners, which manages more than $20 billion on behalf of the founder of Dell Technologies and other investors.

MSD Partners CEO Gregg Lemkau said in an emailed statement, "Peloton is an exceptional brand and MSD Partners is pleased to have this opportunity to back Barry McCarthy and the Peloton team as they position the business for long-term growth."

A Peloton spokesman said that the decision by Foley was "based on his own financial planning."

Foley sold nearly $100 million worth of his stock last year, securities filings show. Most of his sales have been for above $110 a share.

Foley sold his stock to the Dell firm at $26 a share, below an IPO price of $29, according to Wednesday's filing. Peloton shares have lost about 75% of their value in the past 12 months.

Before Foley stepped down as CEO, activist Blackwells Capital, which has a less than 5% stake in the business, publicly criticized his leadership and pushed the business to consider a sale to a company like Nike or Apple. In a February slide deck, Blackwells said the company was "grossly mismanaged."

The activist also called attention to "excessive" selling by Peloton insiders when shares had been trading closer to their highs.

Blackwells said in its presentation to Peloton's board last month that a number of executives had pledged their shares. It said that can prove to be troublesome, because it can lead to forced stock sales in the event of a margin call, thereby accelerating a downward spiral in the stock price.

It's unclear whether Foley was facing a margin call with this most recent sale.

Copyright CNBCs - CNBC
Contact Us