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Peloton comes in activist Blackwells crosshairs again

Apr 13, 2022
A Peloton show room displays bikes and treadmills. Photo by Joe Raedle/Getty Images

Photo: Joe Raedle/Getty Images

Peloton is once again finding itself under pressure from activist investor Blackwells Capital, which is urging the connected fitness company to consider a sale.

Why it matters: Considered a pandemic darling, demand for Peloton’s bikes and treadmills has waned since economies have reopened and its stock has taken a hit. These factors have made it a ripe target despite hiring a new supply chain chief and experimenting with new pricing models.

The latest: Blackwells argued that the company is “worse off now than before” under CEO Barry McCarthy, who took the helm two months ago.

  • Blackwells lambasted Peloton’s governance structure, which largely falls, it says, under the sway of founder John Foley and his super-voting shares.
  • His control is hampering the company’s ability to make significant changes, Blackwells said.

What they’re saying: Blackwells sees Peloton leading a new category of “fitness as a service” with a business that is capable of achieving higher growth and margins without taking on too much cost.

  • “Blackwells believes several strategic buyers would be willing to pay a significant premium for the opportunity to execute on this vision.”

Catch up fast: Peloton first came into Blackwells’ crosshairs in late January, following ballooning costs and reports that it was halting some production.

  • Blackwells at the time said Peloton would be an attractive target for a larger player such as Apple, Disney or Nike.
  • Amazon and Nike subsequently showed some interest, the Wall Street Journal and Financial Times reported.

The other side: Peloton’s McCarthy said that a sale wasn’t on the table and he plans to orchestrate a turnaround plan himself, having joined the company after coming out of retirement.

  • “We appreciate the views of our shareholders and have acted, and will continue to act, in the best interest of all Peloton shareholders,” Peloton said in an emailed statement.
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