Peloton Shares Fall After New CEO Says Company Won’t Be Sold In The ‘Foreseeable Future’

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Topline

Shares of Peloton, which rallied last week on speculation of a possible takeover, fell roughly 3% on Monday after new CEO Barry McCarthy said in an interview that he took the top job at the company to seize a long-term growth opportunity, and not to oversee a sale which he says looks unlikely.

Peloton’s new CEO, Barry McCarthy, pledged to double down on content and downplayed the possibility … [+] of a sale.

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Key Facts

Barry McCarthy, the former CFO of Netflix and Spotify who replaced John Foley as Peloton’s chief executive last week, told the Financial Times on Monday that he didn’t take the job to “oversee a sale.”

Shares of the at-home fitness, which surged last week amid reports of a possible acquisition from potential buyers including Amazon, Nike and Apple, fell roughly 3% after McCarthy dismissed the possibility of a sale.

McCarthy added that he wouldn’t have moved from California to New York if he wasn’t serious about turning the company around and delivering “higher margins.”

Any decision to sell the company remains with cofounder John Foley, other members of the management team and board who control 80% of the voting power, but McCarthy is confident that they will support his growth plans.

Peloton’s new CEO pledged to pursue long-term growth at the company by doubling down on content, expanding globally and increasing the company’s product portfolio.

McCarthy told the FT that Peloton is “a connected fitness company, not a bike company” and “the magic lives” on the company’s digital screens, not its exercise equipment.

Crucial Quote:

“If I thought it was likely that the business was going to be acquired in the foreseeable future, I can’t imagine it would be a rational act to move across the country,” McCarthy said in the interview. “There are lots of other things I could be doing with my time that are quite lucrative than hanging out with a business that’s about to be sold.”

Key Background:

Shares of Peloton surged nearly 40% last week amid reports that the at-home fitness company was drawing interest from potential buyers including Amazon, Nike and Apple, among others. Also helping boost the stock higher, despite a lackluster quarterly earnings report last week, was the appointment of McCarthy, a veteran tech executive, as Peloton’s new CEO on February 8. Shares of the at-home fitness company are still down this year, after falling more than 70% amid waning demand in 2021.

What To Watch For:

Activist investor Blackwells Capital is still pushing for a sale amid “grave concerns” about Peloton’s performance, largely dismissing the recent management changes. Former CEO John Foley naming himself executive chairman and hiring a new CEO “does not address any of Peloton investors’ concerns,” according to a letter from the activist investor last week.