No More Billionaire: How the Stock Price Plummet of Peloton CEO, John Foley Cost Him His Billionaire Status
The public stock markets have been volatile this year, but few losses have been as steep and sudden as that which Peloton CEO, John Foley has experienced in 2020. Foley, formerly a billionaire from the boom days of his company’s stock, has seen his net worth slashed in half in just a couple of months.
John Foley, who co-founded Peloton and acted as CEO of the company since its founding in 2012, is now worth only half a billion dollars. This stunning turn of events makes him the highest ranking Silicon Valley executive to see his fortune cut in half in the past year, and highlights the potential perils of putting all your faith into the stock market.
Who Exactly is John Foley?
John Foley is an entrepreneur who formed the Inc Well Ventures, along with two partners in 2002. This inspired the launch of Peloton in 2012. It was through his work at this venture capital firm that Foley made the majority of his millions.
Prior to founding Inc Well Ventures, he was a software developer for Apple Computers for seven years. During his time there, he worked on developing the Mac operating system. Foley also holds a B.S. degree from Rensselaer Polytechnic Institute, as well as a Master’s degree from the Sloan School of Management from MIT.
How Did Foley Lose His Billionaire Status?
When Peloton went public in 2019, Foley found himself a billionaire on paper. The stock offering was a resounding success and the stock shot up to a value of close to $35 per share right away. This made Foley almost an instant billionaire.
At the end of 2019, Peloton was valued at $14 Billion and Foley’s personal share at around $900 Million.
The problems began earlier this year, when the market started to crash in March due to the coronavirus pandemic. Peloton’s stock price dropped over 50%, taking Foley’s net worth down with it. Over the course of the last few months, the stock has continued to drop, hitting a low of $17 in late June. At this point, Foley’s net worth had dropped by almost 50% from its peak, leaving him worth roughly $450 Million and his billionaire status in the dust.
What Has Caused the Stock Price of Peloton to Plummet?
When Peloton went public, the stock responded favorable for several months. However, the coronavirus has caused shockwaves through the business world, and Peloton has not been immune.
The most obvious factor has been the economic impact of COVID-19. Since its IPO, Peloton has slashed its operating expenses, let go of 10% of its workforce, and paused store openings in the U.S. and Europe.
The pandemic has also forced people to stay at home, which has been a double-edged sword for the company, as the demand for their bicycle products has skyrocketed, but the memberships for their online streaming workout classes has since taken a hit. Recent filings by the company have showed that their active members have dropped from 50%+ of their all time high in March, down to only 39% by the end of May.
Short Selling His Own Shares
After the stock tanked in the spring, Foley set out to boost investor morale by buying 2.7 Million shares of his own company’s stock. He purchased the shares at a price of $18.90, costing him approximately $51 Million, and was hailed by many as a sign of optimism in the face of adversity.
Unfortunately, this gesture has since backfired, as Foley has since been forced to sell the shares to satisfy a margin call. This means that he was forced to sell the stock at a much lower price, losing tens of millions of dollars in the process.
Is the Future Bright for Peloton?
The future of the company is likely still clouded with uncertainty. The health crisis has had a huge impact on businesses, and Peloton is no exception. However, some analysts remain optimistic that the company will eventually rebound, pointing to the huge demand for their products and services as of late.
Their In-Home Bike and Treadmill product has been a huge hit, with sales quadrupling during the second quarter of the year despite most of their stores being closed. They have also seen a huge spike in free trial subscriptions for their streaming workout service.
The key for Peloton will be to find ways to turn this spike in consumer interest into lasting demand for their products and services. While it will likely take some time for their stock price to recover, the future looks promising for Peloton, and CEO, John Foley.
John Foley was a billionaire on paper just a few months ago. The tumultuous stock market of 2020, combined with the coronavirus pandemic, has been enough to impact Peloton’s stock prices, causing the company’s value to plummet. This wiped out Foley’s fortune, leaving him with a net worth of just one-half of a billion dollars.
Foley attempted to raise investor morale by buying back stock of his own company, a measure that ultimately cost him millions in losses. Despite the rough start to the year, the future looks brightly for Peloton, as their products have been in high demand during the pandemic. It will take some time for the stock prices to recover, but the future looks promising for Peloton and its CEO, John Foley.