Peloton Insiders Sold $500 Mln In Stock Ahead Of The Big Plunge: Reports

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Fitness equipment manufacturer Peloton Interactive Inc. (PTON) is again making headlines as SmartInsider reported that the company insiders have sold around $500 million worth of stock. The company has recently come under massive fire after it hired a management agency, McKinsey, to manage its expenses which will lead to the closing of multiple stores and slashing employees in the coming months.

The analysis firm cited SEC filing that shows that the company's big guns have sold shares worth $496 million just ahead of its slump in the market that resulted in the stock prices dropping 80%. The company was removed from the Nasdaq 100 Index after just one year on the exchange after its big drop. The market capitalization of the company dropped from $48 billion in 2020 to a meager $11 billion as of 2022.

According to the firm, the average price of shares sold was around $100 and was a part of 10b5-1 plans or pre-scheduled selling plans. John Foley, the CEO of the company, has sold a massive $119 million in his selling spree which started as early as November 2020. The average value of his sales was $110. Foley ended up selling 1 million stock, about 16% of his shares, by August 30, 2021, just after which Peloton slashed its outlook. Another co-founder, Hisao Kushi, received $90 million for his proceeds.

President of the company William Lynch also sold worth $105 million worth stock with $72 million in an average of $144.95 per share. Chief Product Officer Tom Cortese and COO Mariana Garavaglia sold $60 million and $25 million worth of shares in the same time period.

Experts believe that the company heads understood that the massive growth in sales in not sustainable as the requirement for exercise equipment will drop as soon as gyms reopen and people can go out to exercise. It is what triggered the massive selling spree.

2021 was one of the landmark years for insiders selling stock as Amazon founder Jeff Bezos and Tesla CEO Elon Musk also sold billions worth of shares and exercised their pre-planned offerings to buy back stock at a much-reduced cost. A total of $170 billion worth of stock was sold by company insiders in 2021, almost double of $94 billion in 2020.

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