For Peloton, nothing is going well.
One of the star stocks of containment is today in turmoil, after its stock market share fell by 80% in one year.
On Monday, the activist fund Blackwells Capital demanded the departure of the boss of the start-up, John Foley, but also the sale of the group specializing in home sports.
Unavailable in France, Peloton's connected exercise bikes are a phenomenon across the Atlantic.
They have revolutionized the practice of sport at home thanks to a few ingredients.
These bikes are equipped with a large touch screen, allowing their owners to follow a variety of courses every day, live or on demand.
Users can video chat with their friends who are in the same course.
The group has expanded to other sports activities, such as running, yoga, pilates, fitness...
Read alsoIn the strange world of Peloton, connected exercise bikes are worth 4 billion
But all this has a cost.
A Peloton connected bike costs between 1500 and 2500 dollars, to which must be added a mandatory subscription of 40 dollars per month.
This has not prevented the group from gaining 1 million new subscribers since the start of the Covid-19 pandemic, for a total of 2.7 million active users.
The latter are very loyal: only 8% cancel their subscription during the first year.
Poor inventory management
But Peloton has mishandled the influx of demand for its connected bikes and treadmills.
The latter skyrocketed in the midst of the pandemic, leading to stockouts.
The company therefore invested to beef up its production capacity, betting that consumer demand would continue to climb.
This was without taking into account the fierce competition from other high-end connected fitness players - Tonal, Hydrow, Mirror... -, the reopening of gyms, but also a price positioning that makes Peloton inaccessible to many wearers. cash.
The group therefore finds itself with thousands of bicycles and treadmills under its arm and has decided to temporarily halt the production of new equipment.
The news, revealed by CNBC last week, caused Peloton stock to plummet 25% on the stock market.
Hence the desire of Blackwells Capital to remove the CEO of Peloton.
“
The company is in a less favorable situation today than before the pandemic with high fixed costs, too much inventory, a weak strategy, discouraged employees and disgruntled shareholders
”, writes in a vitriolic letter Jason Aintabi , responsible for the investments of this fund, by denouncing the "
persistent failures of the management team
".
A CEO pushed out?
Jason Aintabi points to the enrichment of John Foley, "
who regularly and repeatedly sold shares, reaping more than $115 million in profits
", while at the same time, "
shareholders lost nearly $40 billion.
He also bemoans the founding CEO's inability to correctly estimate consumer demand. He accuses him of having changed the pricing policy on numerous occasions "
causing confusion among consumers, markets and analysts
", of having misled investors about the group's capital needs, or even of having hired his spouse.
A regular dezincification aimed at "
immediately dismissing John Foley
". “
Peloton has become too big, too complex and too damaged a company to be run by John Foley. The latter should be aware of this and resign
,” stings Blackwells Capital.
The fund is pushing for Peloton to be put up for sale in order to better expand.
“
Peloton and its customers would be very attractive to groups coming from the world of technology, streaming, metaverse and sports equipment, for example Apple, Disney, Sony, Nike,
” writes Jason Aintabi.
“
Given the mess that Peloton has gotten itself into as an independent company, we believe that one or more of these strategic acquirers could bring much more value and pose much less risk to shareholders than is likely to do it Peloton on its own
”.
It remains to be seen whether these requests will be followed up.
Peloton is due to present its next quarterly results, which will be closely scrutinized, on February 8.