According to a new report from The Wall Street Journal, Peloton is looking for a lifeline by actively exploring investors to buy a 15% to 20% stake in the company.
While the news certainly doesn’t come as a huge surprise – with earlier reports this year brewing about potential interest from companies from Nike to Amazon – the report says that talks are underway, with Peloton potentially targeting “industry players and private-equity firms” that could take a hefty minority stake. The Wall Street Journal did write that “discussions are at an early stage” with no firm deals on the table.
Peloton, which once enjoyed a value of around $50 billion early last year, is now valued at around $5.6 billion this week. After falling on hard times due to a heavy decline in consumer demand and a dramatic 2021 product recall, the company switched gears back in February with the announcement of longtime CEO John Foley stepping down to be replaced by former Spotify and Netflix finance chief Barry McCarthy.
The company also cut 2,800 jobs to boost its valuation, which was then around $8 billion, and called off its development of a $400 million factory in Luckey, Ohio, a property that is now listed for sale.
Even with McCarthy’s initial strategy to not sell the company outright and focus instead on international expansion and digital content, stocks have continued to drop. But Peloton isn’t unique in this predicament, with other tech companies, including Facebook’s Meta, feeling the pain due to a slump in tech stocks.
Peloton is hoping a fresh injection of capital can help the company turn around, with the report saying that a heavy-hitting investor such as Amazon could also serve as a vote of confidence in the company.
Back in February, The Wall Street Journal reported that Amazon had been expressing interest in a potential deal, noting a couple of potential tie-ins between Amazon’s existing technology and what Peloton offers. Chance Miller of our sister site 9to5Mac also wrote of the potential deal:
Amazon is also pushing deeper into healthcare, including the launch of the Halo Band fitness tracker last year. This creates yet another tie-in between Amazon’s and Peloton’s ecosystems.
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