Peloton Interactive Inc. faces calls from activist investor Blackwells Capital to fire its CEO and pursue a sale. According to a person who has information on this matter,
As per Bloomberg News, Blackwells Capital LLC, which has less than a 5% stake in Peloton, wants the company to fire its Co-founder and CEO, John Foley. It also wants the company to explore selling its business to be an attractive acquisition for larger fitness or technology firms.
A representative of Peloton did not respond to a request for comment on Blackwell’s move, which Wall Street Journal earlier reported.
Shares of Peloton have crashed by more than 80% from an all-time high a year ago as a stay-at-home fitness company shows slower growth with the easing of the pandemic lockdown restrictions.
After CNBC reported that Peloton was temporarily suspending its treadmills and bikes production, the stock dropped to its two-year low last week. The company’s quarterly earnings also fell short of analysts’ estimates, and Peloton refuted the CNBC report about its production halt.
Peloton recently acquired the services of McKinsey &Co to evaluate its business and valuations. This is not clear if there is a potential sale on the offing or if Blackwells can succeed in ousting its CEO Foley. Foley, a former e-commerce executive with Barnes & Noble Inc. and a cycling enthusiast, co-founded the company after posting a video in 2013 to Kickstarter. According to a report by Wall Street Journal on September 30, Foley and other insiders hold more than 80% of Peloton’s voting power.
Peloton posted a lower than projected quarterly result ending December of $1.14 billion after slashing its annual forecast by $1 billion approximately. Foley said in a statement that Peloton is taking steps to optimize costs and improve profitability. He pledged to provide more information on the cost-cutting plan when it announced its formal earning reports on February 8.
In December, the company’s image suffered when the drama series “Sex and the City” reboot on HBO Max showed the Peloton riding character getting killed.
