Peloton went from darling of the pandemic to bust in the blink of an eye. Now, as buyout rumors swirl, one analyst is questioning if the company could even negotiate a buyout if it decided to.
New Constructs CEO David Trainer said in an interview on the subject, “I don’t know who would buy them, right? I mean, do you think anyone who’s using Peloton doesn’t already have an Amazon subscription or buys Nike stuff? I don’t really know where the value add is.”
Over the last year, analysts have speculated Peloton might seek a buyout, especially as the company shook up its leadership, activist investors agitate, and the company began desperately cutting costs. However CEO Barry McCarthy has steadfastly maintained he intends to revive the company, and not sell it.
Peloton soared during the lockdowns of the pandemic, as gyms closed and people who wanted to exercise were forced to do so at home. However as the lockdowns ended, people returned to the gyms, and Peloton stumbled. Shares have declined 80% this year, hitting a record low just on Thursday.
The company’s fourth quarter earnings report showed the company endured an operating loss of $1.2 billion, $415 million of which were due to restructuring charges. Then executive chairman and co-founder John Foley stepped down earlier this month, adding even more chaos to the business.
Netflix and Spotify veteran Barry McCarthy stepped in to take over, right in the middle of sweeping layoffs and cost cutting, and has been trying to regrow subscription revenue and business growth ever since.
The company has just announced a partnership with Dick’s sporting goods, to offer their hardware products including the original Bike, Bike+, Tread, and Guide as well as some select accessories at branded mini-fitness shops set up inside over 100 of Dick’s 700 retail locations, as well as on Dick’s online website. The launch date is still being worked out.
In addition, Peloton put together another deal to sell its wares through Amazon.
However analysts are still not impressed, as the stock continues to stall.
Trainer said, “We’re not talking about some new workforce automation technology or robots, right? It’s workout products. And it’s priced as if it’s going to continually grow and achieve much better margins than it’s ever achieved. And we just don’t see it. We don’t see a path to that at this point in time.”
Trainer added, “They can’t survive much longer without drastically changing the business model or getting new financing, which, in the current environment, is going to be very difficult.”
