Exercise equipment giant Peloton saw its shares swell 10% on Monday following a recommendation from one of its shareholders to sell the business.
Jason Aintabi, chief investment officer of Blackwells Capital LLC, issued a letter urging Peloton to sell the company’s remaining shares, stating that “a stand-alone Peloton … will still not be able to fully exploit the opportunities of its assets and activate the brand.”
“Without a doubt, Peloton and its customer base would be extremely attractive to a number of technology, streaming, metaverse and sportswear companies (e.g. Apple, Disney, Sony, Nike), who could expand their presence to home, in health and wellness and on screen across Peloton,” Aintabi continued. “Given the mess that Peloton has become as an independent business, we believe that one or more of these strategic acquirers could bring much more value, with much less risk, than Peloton is likely to generate. alone for its shareholders.”
Although Blackwells Capital owns less than 5% of Peloton, according to barrons, the investment firm said the company’s board should “immediately begin to explore these strategic alternatives and find a true owner of Peloton who can get the most out of its people, customers, technology and of its coveted brand”.
Blackwells Capital also urged Peloton to part ways with CEO John Foley, saying he “must be held accountable for his repeated failures to effectively lead Peloton”.
“Society has become too big, too complex and too damaged for Mr. Foley to run,” Aintabi continued.
However, after the letter was released, Peloton saw its stock rise 10% to close Monday’s trading day at $29.71. The company saw a late turnaround late in the day after initially falling 3.4% in premarket activity.
The company as a whole has taken a huge financial hit in recent months, despite being one of the hottest brands during the pandemic.
Known for its high-end exercise bikes and treadmills, with bikes costing from $1,495 to $2,945 and treadmills from $2,495 to $2,945, Peloton has raised significant capital from outside investors. and became a public company in 2019 following an initial public offering. At the height of its value, the brand was estimated at $50 billion.
However, following a series of mishaps and declining sales, Peloton is now believed to be worth less than $9 billion.
Peloton bikes have become known recently for appearing on TV shows, often with unfortunate results.
The company made headlines when Mr. Big, a popular character in the sex and the city restart the show And just like that… died of a heart attack following a Peloton course last December. A similar scene was depicted in the Showtime drama Billions, although this character survived his heart attack.
Following the And just like that… episode, Peloton responded with its own viral ad, poking fun at the show. However, that didn’t end up working in the company’s favor in the long run.
The company’s latest blow came following a recent CNBC report that Peloton was halting production of its exercise bikes.
Foley released a statement: “Rumours that we are ceasing all bike and tread production are false.”
“We are happy with the right size of our production and as we move towards more seasonal demand curves, we are resetting our production levels for sustainable growth,” Foley continued.
However, that didn’t stop Peloton from losing $2.5 billion in value last Thursday after the report, as its stock fell 24%.
Newsweek has contacted Peloton for comment.