An activist investor is pushing Peloton (NASDAQ:PTON) to fire its chief executive officer immediately and consider a sale as its share price has plummeted.
Blackwells Capital, which has a stake of less than 5% in Peloton, puts forth the opinion that the company could be an attractive acquisition target for larger technology or fitness-oriented companies, such as Apple (NASDAQ:AAPL) or Nike (NYSE:NKE), the firm said Monday in a letter addressed to Peloton’s board.
Blackwells is arguing that Peloton is weaker today than before the COVID-19 pandemic. The firm places much of the blame on CEO John Foley, who is also chairman.
Blackwells has said, among a long list of what it calls “failures” that Foley has misled investors regarding the company’s need for capital; he was initially reluctant to work with the Consumer Product Safety Commission on a widespread treadmill recall; he hired his wife as a key executive; and has repeatedly failed to forecast consumer demand, churn and product returns.
Blackwells also pointed to low internal morale, saying Peloton employees are "dispirited" as information has been leaking out to the media.
It will take significant pressure from other shareholders to make any change at the company. Foley and other insiders have super-voting Class B shares, which gave them control over 80% of Peloton’s voting power as of Sept. 30, according to a proxy filing.
PTON shares inched up five cents to $27.11
