Shares of Peloton (NASDAQ:PTON) are down nearly 2% in pre-open Friday after the WSJ reported that the fitness company is looking to sell a minority stake of up to 20% to shore up its finances.
Peloton is reportedly exploring a sale to potential investors, such as private equity firms and industry players that are interested in buying a stake of 15% to 20%. Peloton’s talks with the investors are still at an early stage and there are no guarantees that the company will reach a deal, the WSJ report noted.
The move could boost Peloton’s business and its confidence if the investment comes from a private equity firm or a major industry player such as Amazon (NASDAQ:AMZN), which is also one of the interested parties that have considered a full purchase of the exercise equipment maker.
Peloton’s business thrived following the coronavirus outbreak as customers massively ordered home exercise equipment due to lockdown measures, boosting the company’s valuation. However, Peloton’s glory days ended quickly after lockdowns eased and consumers returned to gyms.
The New York-based company’s valuation has plummeted from $50 billion in early 2021 to just $5.6 billion this week, with its shares dropping a further 9% on Thursday.
In February, Peloton announced its plan to cut 2,800 jobs to prop up its valuation and replaced its chief executive officer John Foley.
Foley, also a co-founder of Peloton, led the exercise equipment company for 10 years and was replaced by Barry McCarthy, the former CFO of Spotify (NYSE:SPOT) and Netflix (NASDAQ:NFLX). At that time, Peloton also dropped its plans to build a $400 million factory in Ohio, trimmed its full fiscal-year forecast, and introduced changes to its board.
By Senad Karaahmetovic