Peloton investor demands sale, not impressed with new leadership

Blackwells Capital owns a nearly 5% stake in Peloton

Peloton's shake-up and new leadership team won't be enough to rescue the embattled cycling giant. 

That's according to investor Blackwells Capital, which has slammed the recent changes, even amid the initial investor reaction. 

The firm, which owns a nearly 5% stake in Peloton, argues that John Foley's decision to transition to executive chair, Barry McCarthy's appointment as the company's new chief executive officer, and the addition of two new board members do not address any of investors’ concerns.

"Foley has proven he is not suited to lead Peloton, whether as CEO or Executive Chair, and he should not be hand-picking directors, as he appears to have done," Blackwells' chief investment officer Jason Aintabi said in a statement. 

Ticker Security Last Change Change %
PTON PELOTON INTERACTIVE INC. 14.51 +0.61 +4.39%

Peloton stock has fallen over 70% in the past 12 months. 

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In response to the changes, the firm has released a scathing 65-page PowerPoint presentation blaming Peloton's underperformance on being "horribly mismanaged" due to Foley's "unbridled enthusiasm taking the place of disciplined leadership." They argue Foley's leadership has resulted in poor decision-making and capital allocation, bloated costs, a lack of financial discipline, misaligned interests and a loss of credibility with employees, investors and analysts. 

Blackwells has also requested to review Peloton's books and records to determine if the company's dual-class share structure led to a lack of effective oversight and precluded independent board directors from exercising their fiduciary duties to shareholders. The firm is demanding that Peloton launch a search for new fully, independent directors, collapse its dual-class structure to allow for "one share, one vote," and revamp its executive compensation programs by requiring at least 50% of each executive's compensation to be performance-based. 

A spokesperson for Blackwells Capital did not immediately return FOX Business' request for comment. 

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Last month, Blackwells sent a letter to Peloton's board of directors urging them to fire Foley and consider selling the company. It noted at the time that Peloton and its customer base would be extremely attractive to any number of technology, streaming, metaverse and sportswear companies, listing possible suitors, including Apple, Disney, Sony and Nike.

Ticker Security Last Change Change %
AAPL APPLE INC. 149.64 +5.86 +4.08%
DIS THE WALT DISNEY CO. 109.32 +3.71 +3.51%
SONY SONY GROUP CORP. 92.26 +1.72 +1.90%
NKE NIKE INC. 115.99 +3.05 +2.70%

The PowerPoint presentation has added a slew of options for additional potential strategic buyers, including Adidas, Berkshire Hathaway, Lululemon, Amazon, Meta, Google, Fox Corp., parent of FOX Business and Fox News, as well as  ViacomCBS, Discovery, Netflix, Spotify, SiriusXM, SoftBank and Oracle. 

Ticker Security Last Change Change %
ADDYY ADIDAS AG 96.74 +1.91 +2.01%
BRK.A BERKSHIRE HATHAWAY INC. 478,669.51 +9,864.47 +2.10%
LULU LULULEMON ATHLETICA INC. 293.65 +6.17 +2.15%
AMZN AMAZON.COM INC. 2,302.93 +81.38 +3.66%
FB META PLATFORMS INC. 195.13 +3.50 +1.83%
GOOGL ALPHABET INC. 2,246.33 +90.48 +4.20%
VIAC n.a. n.a. n.a. n.a.
FOXA TFCF CORP. 35.46 +0.92 +2.66%
DISCA n.a. n.a. n.a. n.a.
NFLX NETFLIX INC. 195.19 +3.79 +1.98%
SPOT SPOTIFY TECHNOLOGY SA 112.97 +4.35 +4.00%
SIRI SIRIUS XM HOLDINGS INC. 6.38 +0.05 +0.79%
SFTBY SOFTBANK GROUP CORP. 21.3 +0.19 +0.90%
ORCL ORACLE CORP. 72.78 +1.12 +1.56%

Blackwells said a fair value for a Peloton acquisition would be at least $65 per share. However, it emphasized that a sale at $75 per share would be "accretive to many strategic buyers with very modest cross-selling and penetration assumptions."

Both Nike and Amazon have reportedly considered bids, according to the Wall Street Journal and Financial Times. Amazon and Adidas have declined to comment to FOX Business on rumors or speculation. Representatives for Peloton and the other companies did not immediately return FOX Business' request for comment.