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Blackwells Capital Reiterates Its Call for Peloton’s Board to Sell the Company
Rhea-AI Impact
(Neutral)
Rhea-AI Sentiment
(Negative)
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Rhea-AI Summary
Blackwells Capital has criticized Peloton's new CEO and management, highlighting a loss of nearly $2 billion in market value over 60 days. The firm argues that governance issues persist, and the company needs a new strategic owner to transition to a high-growth model they term 'Fitness as a Service'. Blackwells has raised concerns about the dual-class share structure allowing former CEO John Foley to maintain control, which they believe hampers investor confidence. They contend that without change, Peloton's powerful brand and loyal subscriber base won't reach their potential.
Positive
Blackwells envisions a potential pivot for Peloton to a 'Fitness as a Service' model that could increase growth and margins.
Negative
Peloton shareholders have lost almost $2 billion in market value under the new CEO.
Current governance issues are undermining shareholder confidence and the company's valuation.
John Foley's continued control through super-voting shares is seen as detrimental to Peloton's future.
Notes That First 60 Days Under New CEO Has Cost Shareholders Nearly $2 Billion in Lost Market Value
Peloton Can Be Reimagined and Grown Significantly With a New Strategic Owner
NEW YORK--(BUSINESS WIRE)--
Blackwells Capital LLC (together with its affiliates “Blackwells,” “we” or “us”), an alternative investment management firm that is a significant shareholder of Peloton Interactive, Inc. (“Peloton” or the “Company”) (NASDAQ: PTON), today published a presentation highlighting the failure of Peloton’s new CEO to galvanize shareholder support, address the severe and lingering governance issues facing the Company, or justify Peloton’s independence.
In the presentation, Blackwells also describes a re-imagined Peloton – a leader in a new category of “Fitness as a Service” providers – that is high growth, high margin and asset light. Blackwells notes that achieving the transition to this optimal business model while remaining public is fraught with challenges. Blackwells believes several strategic buyers would be willing to pay a significant premium for the opportunity to execute on this vision.
Jason Aintabi, Chief Investment Officer of Blackwells, issued the following statement:
“Two months have passed since John Foley was promoted into the role of Executive Chairman and Barry McCarthy came out of retirement to assume the post of CEO. Remarkably, shareholders are worse off now than before. Having provided Mr. McCarthy a $275 million sign-on compensation package, they remain at the whim of former CEO John Foley, who appears financially distressed – and a forced seller of the Company’s stock – even while he still controls the Company.
Meanwhile, shareholders have lost a further $2 billion in market value.
Peloton will continue to be poorly valued for as long as a close-knit group of insiders, who have proven themselves incapable of creating value, continue to wield voting power far in excess of their economic interest. No shareholder should want Mr. Foley to still sit atop the management pyramid or control the Board through his super voting-stock. He lost his entitlement to both positions when he destroyed $40 billion of shareholder wealth in less than a year.
Peloton’s powerful brand, proprietary technology, engaging instructors, and fiercely loyal subscriber base can be shaped into a much more attractive business. But this will not happen effectively in the public markets, especially for as long as Mr. Foley – who has proven utterly unable to manage Peloton or his own financial affairs – maintains control through his super-voting shares.
Blackwells calls upon Mr. Foley to recognize his own limitations and the dampening effect his control has on public market investors by immediately eliminating the dual class structure. Blackwells continues to believe that Peloton cannot be controlled by an Executive Chairman who appears to be under extreme duress, and will pursue all remedies available to it and to all shareholders.”
About Blackwells Capital
Blackwells Capital was founded in 2016 by Jason Aintabi, its Chief Investment Officer. Since that time, it has made investments in public securities, engaging with management and boards, both publicly and privately, to help unlock value for stakeholders, including shareholders, employees and communities. Throughout their careers, Blackwells’ principals have invested globally on behalf of leading public and private equity firms and have held operating roles and served on the boards of media, energy, technology, insurance and real estate enterprises. For more information, please visit www.blackwellscap.com
