Peloton CEO John Foley is stepping down and the company plans to cut about 2,800 jobs

• Peloton CEO John Foley is stepping down, the company announced on Tuesday.
• He's being replaced by Barry McCarthy, a former CFO of Spotify and Netflix.

Peloton cofounder John Foley is relinquishing his role as CEO, the company said on Tuesday.

Foley, who cofounded Peloton in 2012, is set to become executive chair. Barry McCarthy, formerly a chief financial officer of Spotify and Netflix, is expected to replace Foley as CEO. McCarthy is also replacing William Lynch as president.

The connected-fitness company plans to slash about 2,800 jobs, or 20% of its corporate workforce, as part of cost-cutting measures that come on the back of falling demand for at-home fitness.

The news was first reported by The Wall Street Journal.

The firm expects the measures to deliver at least $800 million a year in savings. It also announced it would be "winding down development" of Peloton Output Park, its planned $400 million Ohio facility.

Peloton saw demand for its products soar during the pandemic as lockdowns forced gym-goers to find options for working out at home. But growth started to slow as restrictions eased, and reports emerged in January of pauses in production of Peloton bikes and treadmills because of a slowdown in orders.

Peloton's market value has plummeted from $50 billion last year to $9.8 billion.

In late January, activist investor Blackwells Capital called on Peloton to fire Foley and explore options to sell the company. The Journal reported on Friday that several potential buyers, including Amazon, were eyeing a deal, while the Financial Times reported on Saturday that Nike was considering making a bid for the business.

Foley and McCarthy told The Journal on Tuesday that the company had been planning to find a new CEO for a long time. "I have always thought there has to be a better CEO for Peloton than me," Foley said. "Barry is more perfectly suited than anybody I could've imagined."

McCarthy is a board member at Instacart and Spotify.

Peloton's stock fell 8.7% in Tuesday's premarket session, to $27.11 a share. Shares were down 18% this year as of Monday's close.