PTON Stock Alert: 7 Things to Know as Peloton Trips (And Falls) Again

Peloton (NASDAQ:PTON) just can’t seem to catch a break. Last week, CNBC reported that Peloton would be halting production of its connected fitness equipment due to decreased demand and supply chain issues. However, Peloton CEO John Foley countered the claims and said that they were “incomplete, out of context, and not reflective of Peloton’s strategy.” Furthermore, over the weekend, popular Showtime TV show “Billions” featured a Peloton bike in its season six premiere. Unfortunately for PTON stock, the context in which it was portrayed lent Peloton a negative image.

Peloton (PTON stock) sign on city storefront
Source: JHVEPhoto / Shutterstock.com

PTON Stock Drops Following “Billions” Feature

“Billions” details the lavish and sometimes corrupt life of a hedge fund manager in New York. In its latest premiere, character Mike Wagner suffers a heart attack while riding on a Peloton bike. However, unlike the Peloton cameo in the “Sex and the City” reboot, the character makes a full recovery. After the show premiered, Peloton stated that it did not give the show permission to use Peloton equipment in the episode. In addition, Peloton later added in a tweet: “As the show itself points out, cardio-vascular exercise helps people lead long, happy lives.”

However, the cameo isn’t the only Peloton news that investors are sifting over. An activist investor with a less than 5% stake in PTON stake is now calling for the firing of CEO John Foley and a company sale.

What to Know as Activist Firm Pushes for Peloton Sale

  1. Blackwells Capital is an activist investment firm based in New York. The firm was founded in 2016 by current CIO Jason Aintabi. Aintabi is also the founder and president of Vandewater Capital Holdings, a private equity firm.
  2. Blackwells Capital recently penned a letter to Peloton’s management calling for CEO John Foley to be replaced. The letter stated that Foley is “ill-suited to lead [the] company and must be removed.”
  3. The letter addresses several grievances, such as Foley’s lavish lifestyle, indecisive price changes and improper allocation of capital.
  4. For example, Blackwells alleges that Peloton misled investors when it stated that it did not need additional capital. A few weeks later, Peloton issued $1 billion worth of equity.
  5. Blackwells also alleges that Peloton misled investors by inaccurately forecasting “consumer demand, churn, and product returns.”
  6. Furthermore, Blackwells is unhappy with Peloton’s commitment to a “300,000-square-foot, 20-year lease for office space in New York City.” The investment firm claims that the decision is unwise, as New York is one of the most expensive office and labor markets in the country. In addition, Blackwells accuses Foley of nepotism based on the hiring of his wife as a key executive.
  7. Finally, the letter states that Peloton should sell itself to a technology or sportswear company, such as Disney (NYSE:DIS), Nike (NYSE:NKE) or Sony (NYSE:SONY).

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


Article printed from InvestorPlace Media, https://investorplace.com/2022/01/pton-stock-alert-7-things-to-know-as-peloton-trips-and-falls-again/.

©2022 InvestorPlace Media, LLC