Exercise company Peloton, one of the big winners of the first year of the pandemic, announced this week that it would replace its CEO and cut thousands of jobs following a damaging year for the company and intense pressure from activist investors.

The interactive stationary bike maker will cut 2,800 jobs or 20% of its workforce and Barry McCarthy, formerly of Spotify and Netflix, has been brought in to replace John Foley, who has led the company since its inception in 2012.

Foley's wife, Jilll, will also step back from her role as vice president of Peloton's apparel division, and ally William Lynch's role as chairman will be subsumed into McCarthy's responsibilities at the helm of the company.

Peloton's market capitalisation rose from $7.7bn in late 2019 to around $50bn to late 2020 on the back of lockdown demand, but the changes come after Peloton's market capitalisation fell more than 80% in a year -- wiping out nearly all its pandemic gains -- amid overambitious expansion plans, soft demand and various other issues.

Speaking on a call with investors on Tuesday Foley acknowledged that he had made "missteps" and called the present moment a "humbling time" for Peloton in a tacit acknowledgement that the company had bitten off more than it could chew.

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"To meet market demand we scaled our operations too rapidly and we overinvested in some areas of our business," he said. "We own this. I own this and we’re holding ourselves accountable."

Encouraged by a sales spike of 172% in 2020, Peloton sought to ramp up production of its bikes with the acquisition of equipment manufacturer Precor for $420m, and it also announced plans to build a factory in Ohio in addition to putting more resources into marketing and logistics.

Ultimately, Peloton misjudged lockdown demand as an expansion of the market for its products and subscriptions, and it has been scrambling ever since restrictions started easing (and gyms started reopening) worldwide to plug the growing holes in its finances.

The company announced a hiring freeze in November before upping the price of its purchases and delivery of its bike and treadmill products last month, citing rising inflation and supply chain costs, bringing their respective minimum prices in the US up to $1,745 and $2,845.

Beyond fluctuating demand -- shares in the company fell a quarter just upon the announcement of viable vaccines in November 2020 -- Peloton has also dealt with a succession of reputational crises, veering from embarrassing references in pop culture to serious product recalls.

The company had to recall around 125,000 of its $4,295 Tread+ treadmills last year after the US Consumer Product Safety Commission reported that they had been involved in 70 injuries and a child's death.

Most famously, a character in the Sex and the City revival series And Just Like That... died after having a heart attack on their Peloton bike, forcing the company to come out with an advert talking up the health benefits of its products.

Peloton-related health troubles appear to be popular with Hollywood screenwriters though: a character in financial crime drama Billions suffered a non-fatal heart attack when the show returned last month -- weeks after the Sex and the City incident.

Although Peloton's unflattering television cameos were blamed for stock drops, Peloton's fortunes had been trending negative throughout 2021, stoking anger among investors such as Blackwells Capital, who blamed Foley for the company's performance.

In a scathing presentation, before Peloton announced its leadership changes, Blackwells accused Foley of repeated failures, poor decision making and "gross mismanagement" of Peloton's stock, calling for him to be replaced and for the company to position itself for sale.

In his first public comments since taking over Peloton on Wednesday, however, McCarthy said Foley would be his "partner" and continue to take an active role in the future of Peloton as executive chairman.

Foley, together with his co-founders and other members of the management team and the board, also retains 80% control of the voting power in the company through "supervoting stock," making a sale all but impossible without his approval.

For now, the company will embark on a brutal cost-cutting mission, with $800m in savings expected to be delivered from job cuts, scaling down of its procurement, manufacturing and logistics capabilities, and reductions in spending on marketing, real estate, software and third-party services.

"Our objective is to best position Peloton for sustainable growth while establishing a clear path to consistent profitability and free cash flow as we pursue the significant connected fitness opportunity," Foley said on Tuesday's call.

"Our restructuring will allow us to streamline our teams and reporting structures and create clear lines of accountability for all aspects of our [profit and loss]. The net result will be better and faster decision-making and a more focused team to drive growth and profitability."

(Pic: Ira L. Black - Corbis/Getty Images)