Peloton Considers Going Private Amid Struggles, Per Report
The speculation of a private equity buyout offers some potential light at the end of the tunnel in what’s been a rough few years for Peloton following the pandemic-driven at-home fitness boom
Several private equity firms have been considering a buyout of Peloton, and the connected fitness company has had discussions with at least one firm, according to a new report.
The buyout speculation, reported by CNBC on Tuesday, has resonated with investors, with shares of PTON up over 15% on the day.
Last week, Peloton announced the exit of CEO Barry McCarthy and significant layoffs, which are part of the connected fitness giant’s restructuring strategy to reduce annual expenses by over $200 million. Peloton reported total revenue of $717.7 million in Q3 2024, a decline from $748.9 in the prior-year period.
Although demand for Peloton Bikes surged during the pandemic’s at-home fitness boom, the connected fitness company has struggled to match the consumer fervor of 2020 and has pivoted to a more content-focused model.
The fitness company also has upcoming debt maturities, consisting of convertible notes and a term loan referenced in Peloton’s Q3 2024 shareholder letter.
“We know this is also on the minds of our shareholders,” McCarthy penned in a letter to Peloton team members last week in his final act as CEO. “We believe that achieving sustained positive Free Cash Flow makes Peloton a more attractive investment for debt holders. Overall, our refinancing goals are to deleverage and extend maturities at a reasonable blended cost of capital.”
Peloton added that it has been working closely with JPMorgan and Goldman Sachs and its financial advisor, BDT & MSD Partners, on its refinancing strategy.
“We are encouraged by the support and inbound interest from our existing lenders and investors and we look forward to sharing more about this topic,” McCarthy’s letter said.
Peloton doesn’t anticipate having any issues refinancing its debt, according to CNBC.
At-Home Fitness Woes
The walls may be closing in for Peloton, which is limited in terms of the financial resources needed to take any risks with new growth initiatives, points out Motley Fool’s Anthony Di Pizio.
“(It) makes a sustained recovery all the more challenging,” he wrote.
McCarthy, who led Peloton for just over two years after replacing Peloton founder John Foley, tried countless measures to right the ship and drive enthusiasm post-pandemic: a TikTok content collab, a (now defunct) collegiate sports strategy, a deal with Lululemon, a massive rebrand to move away from hardware in favor of fitness content and a spate of B2B partnerships, among other endeavors.
Demand for at-home fitness equipment has waxed and waned in recent years — apparently catching up to companies who have begun raising white flags. Despite a major rebrand, BowFlex declared bankruptcy and was sold to Johnson Health Tech Retail, the parent company of Matrix Fitness, as part of those proceedings.
Even more recently, Stages Cycling, an indoor and outdoor cycling company that supplies some of the biggest fitness brands in the world, reportedly laid off its staff as it winds down its operations.
