Peloton Climbs After Investor Renews Call to Explore a Sale
2022.04.13 19:15
© Bloomberg. Peloton stationary bikes for sale at the company’s showroom in Dedham, Massachusetts, U.S., on Wednesday, Feb. 3, 2021. Peloton Interactive Inc. is scheduled to release earnings figures on February 4.
(Bloomberg) — Peloton Interactive (NASDAQ:PTON) Inc. shares rose as much as 4.1% on Wednesday after investor Blackwells Capital LLC reiterated a plea to put the fitness company up for sale and decried its performance under a new chief executive officer.
The stock climbed as high as $24.68 in New York following the release of a new presentation by Blackwells pushing for changes. Peloton had been down 34% this year through Tuesday’s close.
New CEO Barry McCarthy took the helm in February and has vowed to turn around the company, which had been thriving during pandemic lockdowns but is now struggling with slowing demand. But he has dismissed the idea of selling the business — irking investors like Blackwells, which says that Amazon.com Inc (NASDAQ:AMZN). and other could be bidders.
Peloton co-founder John Foley was removed from the CEO job in February’s shake-up, but he remains executive chairman and is part of a group that controls the company with super-voting stock. That limits the power of an investor like Blackwells to force Peloton’s hand.
“Peloton will continue to be poorly valued for as long as a close-knit group of insiders, who have proven themselves incapable of creating value, continue to wield voting power far in excess of their economic interest,” Blackwells Chief Investment Officer Jason Aintabi said in a statement. “No shareholder should want Mr. Foley to still sit atop the management pyramid or control the board through his super voting-stock. He lost his entitlement to both positions when he destroyed $40 billion of shareholder wealth in less than a year.”
McCarthy, a former finance executive at Netflix Inc (NASDAQ:NFLX). and Spotify Technology SA (NYSE:SPOT), has been working to boost Peloton’s revenue from services — as opposed to hardware. This month the company slashed the price of a new strength-training device that just went on sale. It also is testing a program that lets customers buy its signature bikes through a subscription program.
But Spotify has lost an additional $2 billion in market value since the overhaul in February and it’s time for bigger changes, Blackwells said.
“Blackwells calls upon Mr. Foley to recognize his own limitations and the dampening effect his control has on public market investors by immediately eliminating the dual class structure,” Aintabi said.
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