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Peloton Gains Amid Calls for CEO’s Ouster, Sale of Firm

Published 01/24/2022, 08:18 PM
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By Dhirendra Tripathi

Investing.com – Peloton stock (NASDAQ:PTON) stock was up 1.2% in Monday’s premarket trading amid calls by activist investor Blackwells Capital on the company to fire chief executive John Foley.

According to The Wall Street Journal, the investment firm, run by Jason Aintabi, is also urging the fitness equipment maker to consider selling itself. A Reuters report named Disney, Apple (NASDAQ:AAPL), Sony (NYSE:SONY) or Nike (NYSE:NKE) as suitors suggested by the fund.

Blackwells owns less than 5% of Peloton.  

Peloton, one of the darlings of investors during the early phase of the pandemic when its bikes and treadmills sold in big numbers, has had it rough since infections began to wane and people returned to work and exercising at gyms.

Last week, CNBC said the company would halt production for two months in the wake of falling demand for its bikes and treadmills. The company denied the report but said layoffs could take place as it attempts to cut operating expenses and improve profitability. 

Blackwells argues Peloton is weaker today than before the pandemic, the WSJ said.

From its lifetime high of nearly $55 billion around a year back, the company’s market cap has dwindled to less than $9 billion. It now trades below its September 2019 IPO price of $29.

As the world began to adjust to a post-pandemic scenario, the company first tried to broaden its consumer base by slashing prices. But even before that could fully play out, the company was forced into beginning charging separately for delivery and setup of its equipment in the U.S., its largest market.

Blackwell’s push at Peloton comes ironically at the same time as private equity KKR is buying Accell (AS:ACCG), a Dutch-based maker of real-world bicycles, for 1.5 billion euro (around $1.7 billion). Accell’s stock surged 24% in Amsterdam trading.

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