Peloton Interactive Inc.’s (NASDAQ: PTON) co-founder and former chief executive, John Foley, was pushed out of his job as executive board chair. Presumably, the exercise bike company’s results were just too poor. As CEO for a decade, he has become the scapegoat for Peloton’s problems, even though new CEO Barry McCarthy has held his job since February. Foley may be gone but perhaps not forgotten. As of the most recent proxy, he held 40% of Peloton’s voting shares. The announcement of his departure did not mention if this had changed. If not, he remains in control of the company.
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If Foley does have 40% of Peloton’s voting shares, then he essentially fired himself as CEO and executive chair. He may rightfully think that his legacy as the head of Peloton during its rapid demise would hurt investor confidence. In this regard, he is correct.

Will Foley be patient if he has enough voting shares to determine who is in management? Peloton had a market cap of $35 billion just under two years ago. It has dropped almost 90% since then. News of Foley’s departure lifted the stock by a modest amount. However, whether it can recover significantly has to do with results and nothing more.

McCarthy is optimistic about Peloton’s future, which is only natural in his place. However, a number of factors are against him. Surely, financial results are among these. Revenue in the most recent quarter dropped by 28% to $679 million. Peloton posted a loss of $1.2 billion. However, this is old news. With the holiday sales season less than two months away, Peloton’s future will be determined by sales over that period as much as anything else.

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Another problem Peloton faces is the number of people who are dumping their bikes and running machines online. eBay and Facebook have plenty of listings. Since demand for these is already low, many consumers will gravitate toward a well-serviced used model to save what could be hundreds of dollars. (The company just announced a new “no longer commitment” program, another sign of soft demand for its new products.) Peloton has entered the used equipment market in its own products, a sign that the company is betting against its new product releases.

Furthermore, Peloton’s success has brought dozens of companies into the market with products promoted as competing with those from Peloton. Virtually all have lower price points than Peloton models.

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