Peloton was hot during the pandemic, barely keeping up with demand for bikes and treads. But sales have tumbled as consumers became more price sensitive and competition increased. The Sex in the City HBO reboot, And Just Like That, and Billions Season 6 episode didn’t help when they killed off lead characters during or after a vigorous workout on a Peloton bike. Company shares tumbled 76% in 2021.

CNBC reported that Peloton is pausing production, but Co-Founder and CEO John Foley denies the claim. In a statement (posted on the website as a “note” sent internally), Foley criticizes an internal leak and subsequent “speculative articles.” His tone is firm when he writes about legal action against the “leaker,” a warning to other employees. Trying to get ahead of more bad news, Foley admits that layoffs are possible, while complimenting the team. He chooses positive data to present: the number of users, workouts, and churn rate. He doesn’t include negative data about revenue or stock price.

The note is part defense and part cheerleader, as Foley props up employees—and the company—against a turbulent time in the company’s history. He demonstrates some integrity, humility, and vulnerability, but his leadership will continue to be taxed in the weeks ahead.

Foley’s full message follows (with the giant logo as it appears on the website):

We have always done our best to share news with you all first, before sharing with the public. This week, we’ve experienced leaks containing confidential information that have led to a flurry of speculative articles in the press. The information the media has obtained is incomplete, out of context, and not reflective of Peloton’s strategy. It has saddened me to know you read these things without the clarity and context that you deserve. Before I go on, I want all of you to know that we have identified a leaker, and we are moving forward with the appropriate legal action. But moving forward, I want to take a moment to talk about some of the changes with you directly.

As a public company that is in a pre-earnings “Quiet Period”, we are limited in what information we can share. However, we issued a pre-earnings press release earlier this evening about our preliminary Q2 results, in order to offer an initial and more accurate picture of our business performance.

As you have heard me and other leaders say over the past few months, we are continuing to invest in our growth, but we also need to review our cost structure to ensure we set ourselves up for continued success, while never losing sight of the important role we play in helping our 6.2+ million Members lead healthier, happier lives.

What this means for our team right now

In the past, we’ve said layoffs would be the absolute last lever we would ever hope to pull. However, we now need to evaluate our organization structure and size of our team, with the utmost care and compassion. And we are still in the process of considering all options as part of our efforts to make our business more flexible.

This team is made up of some of the smartest, most passionate, hard-working and KIND people I have ever met. You have each painted your masterpiece at Peloton in your own way, and your contributions matter. They always have, and they always will.

I am SO proud of everything we have accomplished together, and it pains me we are faced with these tough decisions. I know this is difficult, and I want to thank you for your patience as we work through these times together.

Rumors that we are halting all production of bikes and Treads are false

Notably, we’ve found ourselves in the middle of a once-in-a-hundred year event with the COVID-19 pandemic, and what we anticipated would happen over the course of three years happened in months during 2020, and into 2021.

We worked quickly and diligently to meet the demand head-on at a time when the world really needed us, in large part thanks to how hard you worked every day. We feel good about right-sizing our production, and, as we evolve to more seasonal demand curves, we are resetting our production levels for sustainable growth.

Connected Fitness is here to stay

This past quarter, our churn rate was 0.79%. This means that our Members are sticking with us, again thanks to your brilliance and continued innovation. Connected fitness provides the convenience people need to stay active and centered and will continue to be a key part of the future of fitness. In fact, just a few days ago, we recorded our highest ever number of daily workouts -- over 2.9M workouts.

I want to acknowledge that this does not answer all of the questions I am sure many of you have right now. But, I did want to share what we could at this time.

I know there is a lot of noise and anxiety in our environment right now, which is why I wanted to take this moment to provide some additional context for you all as we navigate the next few weeks together.

John