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Tuesday, July 16, 2024

Peloton Activist Investor Calls for Sale

  • Peleton activist investor Blackwells Capital called for the company to be sold.
  • The investor also called for governance changes.
Peloton
Peloton

Two months ago, Peloton bowed to shareholder pressure and removed John Foley as CEO. Now, an activist investor is agitating for a bigger change. 

Blackwells Capital renewed its call for Peloton to be sold, saying that the connected fitness giant cannot effectively reverse its slide as a public company. Blackwells first called for a sale and Foley’s ouster in January after taking a stake under 5%.

“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 wrote. 

  • Blackwells noted that “shareholders have lost a further $2 billion in market value,” since Barry McCarthy became CEO.
  • The investor stated that McCarthy was given a $275 million sign-on compensation package, yet shareholders “remain at the whim of former CEO John Foley,” who remains executive chairman.
  • Blackwells called for Peloton to eliminate its dual-class share structure, which provides more power to a small group including Foley.

The Next Cycle

Blackwells noted the company’s core strengths, namely its “powerful brand, proprietary technology, engaging instructors, and fiercely loyal subscriber base,” adding that “several strategic buyers would be willing to pay a significant premium.”

Nike and Amazon have reportedly considered bidding for Peloton.

Peloton has lost 30% in market value since McCarthy took over and around 80% in the last 12 months. Shares were up close to 5% on Wednesday following Blackwells’ presentation.

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