Peloton Seeking Buyers for Stake of About 20% of Company

PAccording to a source familiar with the matter, eloton Interactive Inc. wants to sell a 20% stake in the company to help it turn the corner.

A big corporation or private equity company could help to validate the investment. This is the goal, according to the individual, who requested anonymity because it’s private. The person stated that Peloton is in contact with potential buyers but the process is still very early.

Peloton is a New York-based company that declined to comment about the possible sale. This was reported previously by The Wall Street Journal.

COVID-19 Lockdowns saw the company as a big winner, with many stuck-at home consumers scrambling to sign up for its fitness classes and buy bikes. Management has been unable to revive the company’s popularity as demand has declined over the last year. After replacing its chief executive officer in February and its other top executives, the stock of the company continued its slide.

Landing a major new backer could help soothe investor nerves, especially if it’s a company like Amazon—previously seen as a potential bidder for all of Peloton. Software company Box Inc. pulled off a similar move last year when it landed a $500 million investment from KKR & Co.

Peloton stock shares plunged further after Thursday’s news. After the Journal news, Peloton shares fell by as much as 7 percent in trading late Thursday.

Peloton investors such as Blackwells Capital LLC have pushed for the company to sell itself to a buyer like Amazon, but new CEO Barry McCarthy—a veteran of Netflix and Spotify—has said that such a deal isn’t his goal. To increase the recurring income from services, McCarthy has reduced prices for Peloton hardware.

Peloton co-founder John Foley was removed from the CEO job in February’s shake-up, but remains executive chairman and is part of a group that controls the company with super-voting stock. That limits the power of an investor like Blackwells to force Peloton’s hand.

Peloton plans to release its quarterly results in May.

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