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Even for a company that specializes in causing perspiration, Peloton's executives are too often sweating out their future.
Two months ago, the fitness company's previous CEO, company founder John Foley, resigned under pressure from Blackwells Capital, a prominent activist shareholder angry with Peloton's floundering business. On Wednesday, Blackwells blindsided his replacement with a renewed attack.
Spinning Their Wheels
Peloton, with its state-of-the-art stationary bikes and treadmills, used pandemic lockdowns to double its revenue to $4 billion in the fiscal year ending June 30, 2021. The trick was as simple as selling home exercise equipment to everyone attempting to fend off Doordash order love handles.
But then pandemic restrictions were pulled back, gyms reopened, and Peloton's sales slumped. In January, Blackwells Capital -- which owns about 5% of Peloton shares -- published a scathing report accusing the company of being the worst performer on the Nasdaq 300. Blackwells called on Foley to resign and for Peloton to put itself up for sale. Two weeks later, Foley made half their dreams come true by stepping down on the same day Peloton laid off 2,800 staff and canceled a planned $400 million Ohio factory. Foley's replacement, former Netflix CFO Barry McCarthy, has barely had time to get comfortable in the CEO chair before Blackwells put him on blast:
- In a public statement, Blackwells said McCarthy has failed to end a dual-class shareholder structure that gives Peloton's founders control of the company, essentially accusing him of being Foley's puppet. "Remarkably, shareholders are worse off now than before," wrote Jason Aintabi, Blackwells' CIO.
- Blackwells chided McCarthy for Peloton's flailing stock price. The company's market cap is currently $8 billion, down from $50 billion two years ago. Peloton shares are down 33% this year, and 21% since McCarthy took over on February 8. Peloton has also never made an annual profit since going public in 2019.
Just Do It: Media reports have pointed to Amazon, Apple, and Nike as potentially interested buyers, and Blackwells said Wednesday it may sue if Peloton doesn't open itself up to bids.