Peloton executives and insiders sold nearly $ 500 million of their shares before its big fall, according to reports to the Securities and Exchange Commission.
The company's stock has fallen more than 80% from its highs last year, hitting a 52-week low of $ 29.11 on Tuesday. Still, the company's CEO and other executives sold millions of shares at prices above $ 100 per share. share in the months leading up to the big falls.
Business executives and insiders sold their shares for $ 496 million in 2021, according to SmartInsider. Virtually all sales were part of 10b5-1 plans or pre-planned sales programs. It is unclear how many of the sales were also linked to option exercises or option-related tax sales.
Big sales started when the stock started to rise above $ 80 per share in the fall of 2020, and picked up speed in 2021 when the stock held above $ 100.
The company did not respond to requests for comment.
Peloton shares soared as sales and subscribers grew during the coronavirus pandemic. Consumers flocked to the product as they looked for ways to get the sweat out of without a gym membership. To meet the strong demand, Peloton invested in its business and hurried to increase production and speed up order fulfillment. But as Covid vaccines rolled out, the company's demand weakened and its inventory began to decline.
John Foley, the company's CEO and co-founder, sold shares for $ 119 million as of November 2020, according to SmartInsider. Most of his sales were for $ 110 per share. share or higher. The sale was part of a pre-agreed 10b5-1 plan to "sell a limited amount of the company's shares for personal financial management purposes," according to an SEC file.
Although the plan called for selling up to 2.4 million shares through October 2022, Foley announced to the board that he had terminated the sale plan on August 30, 2021 after selling a total of 1 million shares. No justification was given for the termination, but on November 4, 2021, the company lowered its sales forecast and the shares tumbled.
The share sale represented about 16% of Foley's total ownership interest in the company, excluding options. Including options, the sale accounted for about 5% of his holdings, according to SmartInsider.
Many of the top Peloton bosses also paid out part of their holdings with well-timed sales. William Lynch, the company's president, sold more than $ 105 million in shares last year, with $ 72 million sold in February at an average price of $ 144.95.
Peloton CEO John Foley celebrates on Nasdaq MarketSite before the opening bell and his company's IPO, Thursday, September 26, 2019 in New York.
Mark Lennihan | AP
Hisao Kushi, co-founder and chief legal officer and cultural director, sold more than $ 90 million of his shares - most at prices above $ 110 per share. shares. Other big sellers included the company's product manager, Tom Cortese, who sold more than $ 60 million of his shares, and its operations manager, Mariana Garavaglia, who had more than $ 25 million in sales.
Board members have also paid out their holdings, including Karen Boone, who sold more than $ 20 million in stock in February last year at prices above $ 140 per tonne. share, according to registrations.
Peloton insiders were not alone in their sales during last year's soaring stock market. With large stock sales from prominent executives like Jeff Bezos and Elon Musk, total insider sales reached a record high of $ 170 billion last year, up from $ 94 billion in 2020, according to SmartInsider. Historically, business leaders and insiders sell below or near highs in their stock price.
"One of the most recognized facts from decades of insider trading research is that corporate insiders buy close to the bottom and sell close to the top," said Daniel Taylor, an associate professor at Wharton School.
Currently, the Peloton is flirting with new lows. The stock came very close to going below the IPO of $ 29 per share. share after CNBC reported that the company had hired McKinsey as it reviews its cost structure, an effort that could result in cuts and store closures. Peloton also effectively raises product prices later in the month when it begins charging for shipping and installation.