Why Peloton Is Starting to Lose Its Star Instructors

Last month, it became obvious that the odds of Peloton’s survival as a company were plummeting. At the time, reports were coming out that private-equity firms were thinking about taking it over. It had already lost two CEOs and downsized its expansion plans, and the stock was down 97 percent. None of the company’s efforts to firm up its situation seemed to satisfy Wall Street — an attempt to cut down on its outstanding debts sent the stock plunging by another 25 percent before recovering a little bit.

Most recently, the company has taken a more dramatic step that risks alienating portions of its die-hard fan base: culling its roster of superstar (but also expensive) instructors — the runners, cyclists, and yoga teachers who are the faces of Peloton’s video programming, and the anchors that keep millions of users coming back.

Earlier this month, Peloton announced that three of its most popular instructors — Kristin McGee, Kendall Toole, and Ross Rayburn — would be leaving. McGee, who was probably the biggest of the three stars, posted on her Instagram that she “decided to spend time to focus on my family and move on from Peloton.” Toole and Rayburn made other similar video announcements. According to Pelo Buddy, a fan site, Peloton said that the departures came “during our most recent round of contract negotiations.” It has all come across as weirdly bloodless. “I’m so sad to see my teammates go. I love them deeply, but in the same way I’m not concerned that they’re not in my life anymore,” Jess King, another instructor, told “Page Six.”

In a statement, Peloton downplayed the departures. “As with all businesses who work with professional athletes, Instructor contracts are a normal and ongoing part of the Peloton process. During our most recent round of contract discussions, three of our beloved Instructors have chosen to leave to explore new opportunities,” the company said in a statement, which also hinted that the company may hire new instructors to replace them at some point.

One imperfect way to see if a company is doing well is to see if its executives are doubling down on it by buying more shares of the company and hoping that their internal corporate efforts are rewarded by investors. That is not happening at all. During the last three months, executives — including Peloton’s chief financial officer, Elizabeth Coddington — have been selling off their shares, according to securities filings. Coddington, who joined just two years ago, appears to be dumping her stake in the company as the shares vest, or become available for sale. At one point in May, she held more than one million restricted stock units, or RSUs — a form of unvested shares — but by mid-June, she had whittled her holdings down to 174,000 RSUs. (Peloton didn’t return a request for comment on Coddington’s holdings.)

Now, executives sell shares of their companies all the time, for any number of reasons, and Coddington’s sales aren’t dispositive of anything wrong. Still, the filings show that she sold stock at an average price of about $3.68 — just a bit off its all-time low of $2.99 a share on May 28, and a far cry from when it traded in December 2020 at around $162. At this point, it wouldn’t be a surprise if there was more of an exodus from the C-suite than from the instructor roster. This points at another problem for the company: Peloton can always hire another bike instructor or yogi who wants a massive built-in audience. But it will probably cost Peloton far more to get new executives to save a company that Wall Street is leaving for dead.

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