Tuesday's Headlines: Peloton's Executive Shakeup Continues

Tuesday's Headlines: Peloton's Executive Shakeup Continues

Here were the biggest movers in the MyWallSt shortlist yesterday:

Moving Up ⬆️

Peloton Interactive (PTON) +7.2%

Smartsheet (SMAR) +6.3%

Farfetch (FTCH) +6.2%

Coupa Software (COUP) +4.8%

Twilio (TWLO) +4.8%

Moving Down ⬇️

Silicon Valley Bank (SIVB) -4.0%

Zillow (Z) -2.0%

TrueCar (TRUE) -2.0%

Twitter (TWTR) -1.8%

Casey's (CASY) -1.7%

Here are the stories that you need to know ahead of market-open today, Tuesday the 13th of September.

Co-Founders Leave Peloton Amid Continued Shakeup 👋

On Monday, Peloton (PTON) announced the departure of two of its co-founders, as well as another long-serving executive. John Foley, who served as executive chairman, and fellow co-founder Hisao Kushi, have resigned their positions, while the company's chief commercial officer, Kevin Cornils, will also leave.

Foley, who was the most visible of the company’s founders, served as CEO for nearly ten years, before stepping down in February. He took on the role of executive chairman, being replaced by Netflix and Spotify veteran, Barry McCarthy.

McCarthy paid homage to the departing founders in a letter to Peloton employees. “Without John’s unwavering commitment to his dream, there wouldn’t be a passionate and devoted community of nearly 7 million Peloton Members. I want to thank John for paving the way.”

McCarthy has since attempted to orchestrate a major turnaround at the business, focusing on offloading inventory, starting a rental scheme for hardware, and signing a deal to sell some Peloton equipment through Amazon.

Peloton went public in 2019 and grew rapidly during the COVID-19 pandemic as people rushed to find alternative means to exercise while in lockdown. That demand did not maintain as restrictions ended, leaving the business with high inventory levels. Shares have fallen over 70% this year.

Karen Boone, former president of Restoration Hardware, will take on Foley’s role as chairperson of the board. Tammy Albarrán, Uber’s chief deputy general counsel, will replace Kushi.

Instagram is on the Ropes 🤕

Another day, another The Wall Street Journal expose. This week, Meta (META) finds itself under the spotlight after internal research wound up in the hands of the newspaper. Entitled “Creators x Reels State of the Union 2022”, the document details the performance of Instagram’s Reels feature, which was developed and promoted as the aging platform’s answer to TikTok.

Unfortunately, it would appear that Reels is no match for the Chinese goliath.

It was reported that Instagram users cumulatively spend 17.6 million hours a day watching Reels, less than one-tenth of the 197.8 million hours TikTok users spend each day on that platform. Even more concerning, users seem to be losing interest. In August, Reels engagement fell by 13.6% and researchers reported that “most Reels users have no engagement whatsoever.”

Part of the problem is creators are uninterested in developing original content for the platform. While Instagram counts 11 million users as creators, less than 2.3 million post more than once a month. Additionally, one-third of the videos found on the platform originate from somewhere else, usually TikTok. This is even after Instagram redeveloped its algorithm to downvote videos with TikTok watermarks or effects.

Speaking of the algorithm, the report also detailed how this has alienated creators and pushed them to other platforms. “Meta’s suite of monetization product offerings is largely in-line with competitive offerings, though limited product scale results in fewer paid creators / low % of payouts”.

Worse still, user sentiment is at an all-time low. The portion of users who think the company “cares about them” has fallen 70% since 2019, reaching 20% this summer.

However, a Meta spokesperson stated this does not reflect the company’s internal data, but declined to elaborate further.

Meta’s stock is so far unaffected by the leak.

Lucid Stock Races Even Higher ⚡️

Shares in electric vehicle (EV) manufacturer Lucid climbed higher yesterday following a report that its production has significantly increased. A prominent analyst at R.F. Lafferty also initiated coverage on the company with a ‘Buy’ rating, further fueling its sudden rise. Lucid finished yesterday up close to 10% and is continuing that pre-market today, where it’s risen a further 1% so far.

An admittedly unconfirmed report on a prominent Lucid owners forum claimed that an internal source has stated that Lucid is now producing between 40 and 50 vehicles per day — a marked improvement from its previous rate of between five and fifteen vehicles. This comes on the heels of a relatively recent changing of the guard at the company’s executive level. This could potentially put Lucid on track to meet its production forecast for the year, a mark which had looked quite unattainable quite recently.

The 'Buy' rating, meanwhile, was prompted by strong order numbers and lucrative long-term deals with the likes of the Saudi Arabian government prompted the all-important buy rating.

Lucid Motors is a luxury EV manufacturer headquartered in Newark, California. It went public via SPAC in July of 2021 in one of the year’s most eagerly anticipated public debuts. It has grown rapidly, with over 20 retail studios now up and running in the U.S. It seems to have generated a strong demand for its products, with over $3.5 billion of orders for its Air model on the books already.

However, the company only manufactured 306 vehicles in the first quarter of this year, so it needs to begin to scale fast. Currently down almost 60% year-to-date and just over 70% from all-time highs late last year, Lucid shareholders will be hoping this is the beginning of a turnaround.