Activist investor Blackwells aims to subpoena Peloton to fire CEO, seek sales, Sunday, January 23, 20227: 29PM EDT Updated, January 23, 20227: 58PM EST
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| Activist investor Blackwells aims to subpoena Peloton to fire CEO |
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An activist is pressing Peloton to fire its CEO and is considering selling as stock prices fall, according to a person familiar with the matter.
The source said Blackwells Capital, which owns a 5% stake in Peloton, believes Peloton could be an attractive acquisition target for big tech or fitness-based companies.
Foley and other insiders are certain to have super-voting Class B shares, giving them control of 80% of Peloton's voting power as of September 30, according to a proxy filing.
An activist is pressing Peloton to fire its CEO and is considering selling as stock prices fall, according to a person familiar with the matter.
The source said Blackwells Capital, which owns a 5% stake in Peloton, believes Peloton could be an attractive acquisition target for big tech or fitness-based companies.
Blackwells argues that the Peloton COVID-19 pandemic is weaker today than ever. The company blames CEO John Foley, who is also its chairman, according to the man, who asked not to be named to speak on personal matters.
Peloton declined to comment. A Blackwell's spokesperson did not immediately respond to a request for comment by CNBC. Folio did not respond to a request for comment.
Foley and other insiders are certain to have super-voting Class B shares, giving them control of 80% of Peloton's voting power as of September 30, according to a proxy filing. This means that any change in the company will require significant pressure from other shareholders.
Peloton's stock is now trading at less than its September 2019 initial public offering price of $29. It closed at $27.06 on Friday, giving the company a market capitalization of $8.8 billion. About a year ago, Peloton had a market capitalization of about $50 billion.
Last week, CNBC reported that Peloton is working with consulting firm McKinsey & Co. To find work areas to reduce costs, as the speed of fitness equipment in her home slows down. CNBC also reported that the company plans to temporarily shut down production of its bikes and treadmills, on a turbulent schedule, to help reset inventory levels. Peloton shares fell more than 20 percent on Thursday's news.
In response, Foley said in a memo to workers that it was not true that Peloton was "closing all production". However, he said the company must "select the appropriate size" of its inventory. He added that Peloton is considering eliminating jobs to become a more flexible business.
On Thursday evening, the company announced preliminary revenue for the second quarter of 1.14 billion and said that it ended the quarter with 2.77 million subscribers.
"We are taking important corrective steps to improve our profitability outlook and improve our costs across the company," Foley said in a statement, including the second-quarter numbers.
Among other things, Blackwells also criticized Peloton for its inconsistent pricing and production strategies, the person said.
Later this month, Peloton will begin charging customers hundreds of dollars extra for bike setup, delivery and trade fees, which are responsible for historical inflation and increased supply chain costs. Just last year, Peloton cut the price of its bikes by about 20%.
The Wall Street Journal first reported on the Blackwell news
