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Peloton's pulling on Lululemon pants

May 6, 2022
 Data: Yahoo Finance; Chart: Axios Visuals
Data: Yahoo Finance; Chart: Axios Visuals

Peloton's effort to seek an outside investment seems a bit off from the takeover hubbub around the fitness firm a few months back. But if Lululemon is any indication, a minority sale could be a major boost.

Why it matters: Such an investment could be worth around $1 billion and play a key role in turning around the fortunes of this pandemic darling that flew to the WFH moon and crashed to earth earlier this year.

Driving the news: Peloton is said to be seeking a minority stake investment in the company of between 15% and 20%, the Wall Street Journal reported late on Thursday.

  • In January, Peloton's stock plunged on production concerns, leading to reports that buyers were circling the company.

Between the lines: Selling a small stake in the fitness brand addresses a few issues to the positive, among them alleviating any antitrust concern that could emerge from a corporate buyer.

Flashback: Lululemon's founder, Chip Wilson, sold a 13.85% stake (half of his personal ownership in the company) in the yoga gear maker in 2014, at a time when the company was struggling and when Wilson was battling the board.

  • Private equity firm Advent International bought the stake, and from there, Lululemon's growth has soared.

What we're watching: In addition to finding the right partner, if it goes down that road, Peloton will have to navigate the tricky economic climate if it wants to wage a Lululemon-esque turnaround.

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