Peloton Scouting For Minority Investment To Get Its Business On Track: Report

Beleaguered at-home fitness brand Peloton Interactive, Inc. PTON is looking for a lifeline to rescue it from a troublesome situation.

What Happened: Peloton is seeking to sell a minority stake of 15% to 20% to potential investors from among peers and private-equity partners, the Wall Street Journal reported, citing people familiar with the matter.

If the company manages to rope in big industry players such as Amazon, Inc. AMZN or an established private-equity firm, it could be seen as a "vote of confidence" for the business, WSJ noted.

Why It's Important: Peloton emerged as a major COVID-19 play, as its exercise equipment and virtual classes saw significant demand amid the stay-at-home setting necessitated by the pandemic. Once the pandemic situation improved, the company began to see a steep drop in demand for its product and services. It was also left to contend with tough comparisons.

Related Link: Does A Potential Peloton Acquisition Make Strategic Sense For Apple?

Amid the fundamental woes in a post-pandemic economy, the company replaced its CEO John Foley in early February.

Peloton shelved a $400 million manufacturing facility under construction in Ohio and announced several other cost-cutting initiatives, including workforce reduction. The company also lowered its forecast for the fiscal year 2022.

Peloton stock is now a pale shadow of its old self. From a pandemic high of $171.09, the stock is currently trading at high-teens levels. The stock closed Thursday's session down 9.09% at $17.01, according to Benzinga Pro data.

Related Link: Why Apple's Business Model Won't Work For Peloton And How The Fitness Company Can Turnaround Its Business

Photo: Courtesy of Peloton