Peloton To Be Pushed By Activist Investor To Fire CEO And Explore Sale: WSJ

Activist investor Blackwells Capital LLC wants the stationary-bike maker Peloton Interactive Inc PTON to fire its CEO John Foley and explore a sale, The Wall Street Journal reported Sunday, citing sources.

What Happened: The activist investor believes the exercise equipment maker could be an attractive acquisition target for larger technology or fitness-oriented companies. 

Blackwells, which owns less than 5% stake in Peloton, believes the company is weaker than before the pandemic and placed most of the blame on Foley.

See Also: Peloton Analyst Cuts Price Target By 45% Following Latest Sell-Off

Why It Matters: Peloton shares plummeted 24% on Thursday after a CNBC report said the company is temporarily halting production of its bikes and treadmills to control costs as fitness equipment demand wanes.

Shares rallied by 11% midday Friday but remained down about 83% over the last year. 

Foley, in a statement on Friday, dismissed the CNBC report and said the company had no plan to halt the production of bikes and Treads.

The Peloton CEO said the company is "taking significant corrective actions to improve our profitability outlook and optimize our costs” and would share more details with earnings on Feb. 8, as noted by WSJ.

The company's said in a preliminary report that its subscriber count rose to 2.77 million during the fiscal second quarter, short of the company's guidance range of between 2.8 million and 2.85 million. 

Price Action: Peloton shares closed 11.7% higher at $27.06 a share. The stock is down 23% year-to-date.

Photo: Courtesy of Peloton