Peloton investor calls for fitness tech company to sack its CEO and explore sale
Activist Investor Blackwells Capital is pushing Peloton to fire its CEO and explore a possible sale of the company after its shares plummeted sharply last week.
Blackwells Capital, which has a stake of less than 5% in Peloton, believes the company could be an attractive acquisition target for larger technology or fitness-oriented companies, such as Apple or Nike, the firm said Monday in a letter addressed to Peloton’s board.
Blackwells is arguing that Peloton is weaker today than before the Covid-19 pandemic. The firm places much of the blame on CEO John Foley, who is also chairman.
The pandemic turned Peloton which offers stationary bikes and treadmills with livestreamed workouts from popular instructors into one of the market’s hottest stocks, but the company’s stock price has plummeted 84% in the last year. Peloton is now valued at roughly $8 billion down from $50 billion at the peak of its popularity roughly a year ago.
Among a laundry list of “failures,” Blackwells said that Foley has mislead investors regarding the company’s need for capital; he was initially reluctant to work with the Consumer Product Safety Commission on a widespread treadmill recall; he hired his wife as a key executive; and he has repeatedly failed to forecast consumer demand, churn and product returns.
Blackwells also pointed to low internal morale, saying Peloton employees are “dispirited” as information has been leaking out to the media.
“The company has gotten too big, too complex and too damaged for Mr. Foley to lead it. And he should have enough self-awareness and enough self-interest, to resign as a director,” Blackwells said.
Peloton shares fell more than 2% in premarket trading, after closing Friday up 11.7%.
“We are taking significant corrective actions to improve our profitability outlook and optimize our costs across the company,” said Foley, in a statement along with the second-quarter figures.
The company is scheduled to release earnings on February 8 and Foley said more details would be announced then.
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