Tonal is rumored to be trying to sell itself – but to whom?

It’s no secret that the high-end at-home trainer Tonal has seen better days. After facing massive staff layoffs, store closures, a nagging lawsuit with its major supplier, and a burn rate that has soured investors, the company is now rumored to be exploring a sale. But who will pick up the tab?

After an explosive valuation of $1.9 billion in 2021, Tonal has since been desperately trying to raise capital at less than a third of that number and is reportedly looking to replace its CEO, currently founder Aly Orady, according to “people familiar with the matter” who spoke with The Information.

According to the report, Tonal has been “exploring many options to shore up its business, including lining up fresh capital and sounding out buyers.” But the report added that “the pool of interested purchasers could be slim.”

Peloton seems a steady option. Last year Tonal was already in discussions with Peloton about a sale, but that didn’t happen, partly because Peloton had been having its own financial troubles post-pandemic, and the two companies couldn’t agree on a price. For its part, Peloton spent $2.4 billion in the year to June 2022 and replaced its founder and CEO, John Foley, with former Netflix CFO Barry McCarthy.

Meanwhile, Tonal had been slashing costs by closing up its studios and stores, including a signature showroom in New York’s Flatiron District, and laying off some 35% of its staff, including all of its original coaches. But more bad news emerged last year with a legal battle with its primary hardware suppliers Foxconn over late payments.

Unlike its competitors Peloton and Mirror, which have cut prices to boost sales, Tonal has taken a different approach by raising its prices in January, and pairing that with a glitzy celebrity-led ad campaign to gain new customers. Tonal, backed by athletic stars the likes of Serena Williams and Mike Tyson, has positioned itself as one of the most upscale at-home fitness products on the market, with its workout station priced at $3,995. After that, Tonal will cost you nearly $60 a month for a digital account, which offers live and on-demand fitness classes.

According to sources who spoke with The Information, Tonal will likely continue its high burn rate through 2024 and need to continue raising money, but that investors are likely to demand more protections should the company get sold or liquidated.

Of course, Tonal isn’t the only at-home fitness company to be struggling post-pandemic, including Peloton’s many dramas, which we’ve reported on here. Back in 2020, Mirror sold to Lululemon for $500 million, with the company having recently cut its price in half to $795 for its connected device, and rowing machine maker Hydrow cut more staff in a fresh round of layoffs this January.