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Peloton shareholder Blackwells Capital has sent a letter to the fitness company’s board of directors calling for the removal of CEO, chairman, and co-founder John Foley over concerns about the company’s performance.
With a stake under 5%, alternative investment management firm Blackwells Capital also wrote that the board “must consider selling the company to a strategic acquiror.”
The letter emphasized Peloton’s failure to act on opportunities in the market presented by the pandemic, giving a multitude of examples.
- The company’s stock is below its IPO price and down more than 80% from its high.
- In the last year, Peloton underperformed every other company in the Nasdaq 100. In Q1, Peloton recorded a $376 million net loss compared to a net gain of $69.3 million the year prior.
- Shareholders have lost nearly $40 billion in wealth while Foley has received more than $115 million from regularly selling stock.
Blackwells Capital attributed Peloton’s position to “high fixed costs, excessive inventory, a listless strategy, dispirited employees, and thousands of disgruntled shareholders.”
Potential Sale
The firm also detailed the benefits of a sale, specifying the company’s attraction to “any number of technology, streaming, metaverse, and sportswear companies.” It listed Apple, Disney, Sony, and Nike as examples.
Peloton recently hired McKinsey & Co. to evaluate its costs and business. A recent CNBC report said the company was halting production and reviewing its workforce. The claim was later refuted by Foley.
According to The Wall Street Journal, Foley and other insiders control more than 80% of the company’s voting power.
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