Zinger Key Points
- Interactive Strength shares plummeted after a $15 million all-stock deal to acquire Sportstech Holding.
- Market reacts negatively to the stock-based transaction, despite expectations of increased revenue and profitability.
- Get real-time earnings alerts before the market moves and access expert analysis that uncovers hidden opportunities in the post-earnings chaos.
Interactive Strength Inc. TRNR shares are down following the announcement of a $15 million all-stock acquisition of Sportstech Holding, a German-based connected fitness equipment company.
What To Know: The deal, structured as a non-voting convertible preferred stock transaction, aims to expand TRNR's presence in international fitness markets, particularly in the U.S. and Germany.
The acquisition will give TRNR a 99% stake in Sportstech, which generates over $40 million in revenue and has nearly three million customers. The deal includes a performance-based valuation structure, with potential stock-based earn outs of up to $40 million tied to EBITDA targets through 2027. No cash consideration is involved and Sportstech's founder, Ali Ahmad, will join TRNR's board.
Despite expectations that the combined company will generate over $50 million in revenue in 2025 and reach EBITDA profitability in the second half of the year, TRNR shares dropped sharply. Investors may be reacting to concerns over dilution, given the stock-based nature of the deal, or uncertainty surrounding TRNR's ability to integrate Sportstech successfully.
TRNR Price Action: Interactive Strength shares were down 13.73% at $1.32 when the market closed Tuesday, according to Benzinga Pro.
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