Investors in fitness equipment manufacturer Peloton Interactive lost almost everything after the company’s share price, which skyrocketed during the earlier part of the coronavirus outbreak, crashed 90 percent from its one year high.
Bubbleheads investors who bought at the 2021 highs now have to deal with news that Peloton executives and insiders sold nearly $500 million worth of their stock before the shares tanked, according to filings with the Securities and Exchange Commission (SEC).
The maker of stationary bikes and treadmills for home-based gyms has been dragged down by lower sales as coronavirus vaccines rolled out across the U.S.. The company is considering layoffs. Peloton invested in its business to meet the strong demand, but as covid vaccines rolled out, the company saw demand weaken.
Peloton stock is down more than 90 percent from its all-time high near $170 in January 2021, and fell below its IPO price of $29 to close at $27.06 on Friday, Jan. 21. It was trading at $28.15 as of this writing.
The company’s CEO and other executives sold $496 million worth of their shares in 2021 at prices over $100 a share in the months leading up to the big declines, according to CNBC. Nearly all the sales were prescheduled selling programs or part of the Securities and Ecchange Commission’s 10b5-1 plans, which allow insiders of publicly-traded corporations to set up a trading plans for selling stocks they own.
The stock started surging higher than $80 a share in the fall of 2020. Executive and insider selling gained momentum in 2021 as the stock held above $100, SEC filings show.
The company’s CEO and co-founder, John Foley, said sales were part of the prearranged SEC 10b5-1 plan to “sell a limited amount of the company’s shares for personal financial management purposes.”
Foley sold a massive $119 million worth of stock from November 2020, according to CNBC, and most of his sales were $110 a share or higher. Foley ended up selling 1 million stocks, about 16 percent of his shares, by Aug. 20, 2021.
Top Peloton executives who sold out their shares include William Lynch, the company president, who sold more than $105 million in shares last year, with $72 million sold in February at an average price of $144.95.
Peloton stock went public in September 2019 at $29 a share. The stock closed as high as $167.42 in January 2021 as sales and subscribers grew during the coronavirus pandemic. People flocked to buy the exercise bikes as they looked for ways to exercise without going to the gym. Prices of exercize bikes and treadmills range from about $1,645 to $2,945.
Photo: Peloton store, Palo Alto, Calif, Sundry Photography / iStock
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