An activist investment firm slammed Peloton’s new boss Barry McCarthy in a scathing attack on Wednesday, arguing that the fitness company is now “even worse off” than it was with its controversial founder as CEO and has cost shareholders a fortune by not considering a sale have.
Blackwells Capital said “nothing fundamentally changed” at Peloton since McCarthy replaced embattled company founder John Foley as CEO in February. according to a presentation addressed to the Board of Directors of Peloton.
Meanwhile, Foley still exercises too much control over Peloton’s operations through his voting rights and role as CEO, according to the company – which has claimed the founder “appears to be in financial distress” and is a “forced seller of the company’s stock.” what he looked like dumping personal fortune in recent months.
“Peloton’s strong brand, proprietary technology, dedicated instructors and fiercely loyal subscriber base can be molded into a much more attractive business,” Blackwells chief investment officer Jason Aintabi said in a statement.
“But this will not happen effectively in the public markets, especially as long as Mr. Foley – who has shown himself utterly incapable of managing Peloton or his own financial affairs – remains in control through his super-voting shares,” he added .
In his presentation, Blackwells said selling Peloton to another company would be “worth much more to investors” than continuing to operate under the company’s current management team. Aintabi said McCarthy and Foley erased another $2 billion in market value by not addressing internal issues since the management reshuffle.
Despite the push by activists, Peloton shares are up about 2% in early trade on Wednesday. Peloton’s shares are down more than 30% so far this year and more than 80% over the past 12 months as demand for the company’s equipment has eased.
Blackwells first urged Peloton to overhaul its management and seek a sale earlier this year – identifying Amazon, Apple and Nike as potential buyers. The activist firm owns less than 5% of Peloton.
“Issues related to cost structure, capital allocation, inventory management and quality control continue to plague the company,” the company’s presentation said.
McCarthy, Netflix’s former CFO, replaced Foley as CEO in February in a restructuring that saw Peloton lay off about 2,800 employees, or about 20% of its corporate workforce. Shortly after taking the reins, McCarthy told employees that the company’s finances were “unsustainable” without the cuts.
So far, McCarthy has suggested that Peloton focus on pursuing a comeback of its own rather than selling itself to another company.
Meanwhile, Foley came under scrutiny for selling $50 million worth of stock last month as the company attempted to reverse its business. In a statement, Peloton said the sale was “based on its own financial planning.”
https://nypost.com/2022/04/13/peloton-activist-investor-slams-new-ceo-in-call-for-sale/ The activist Peloton investor criticizes the new CEO in the sales call