Getting Back in Shape: Peloton’s Turnaround Strategy Includes Minority Stake Offer
Glory Days Gone?
During the pandemic, Peloton Interactive (PTON) was flying high. As people abandoned gyms and sought out ways to keep fit at home, many found a solution in the company’s bikes and streaming classes.
As people have emerged from their pandemic hibernation, Peloton has seen erosion of its customer base as gyms regained favor. The fitness company has seen its valuation shrivel from $50 billion in early 2021 to under $6 billion in Q2 2022. The company is looking for ways to enact a turnaround and stabilize financially.
In early 2022, Barry McCarthy, who hails from Spotify (SPOT) and Netflix (NFLX), replaced Peloton co-founder John Foley as CEO. At the same time the company announced plans to cut 2,800 jobs and to nix a $400 million spend to build a factory in Ohio.
McCarthy also wants to move away from an emphasis on equipment sales and focus on subscription-based models, similar to those used at Spotify and Netflix. To support these initiatives and gain favor with investors, the company is also seeking outside capital.
Seeks Minority Investor
The company is offering investors a 15 to 20% minority stake, the capital from which could help it to execute its turnaround ambitions.
Earlier this year, when Foley was still CEO, activist investor Blackwells Capital called for the company to be sold. Amazon (AMZN) has reportedly considered purchasing the whole company outright. Now, Peloton is looking for a financial partner who can both provide a financial infusion and rebuild its credibility with investors. Meanwhile, the broader tech sector’s sell-off is not helping the situation. Peloton seems to have a couple flat tires, with the question being whether McCarthy can assemble the toolkit needed to fix things.
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.