An activist investor firm demanded Monday that Peloton fire its embattled CEO John Foley and explore a sale of the company following what it described as his “repeated failures to effectively lead.”
In a scathing letter to Peloton’s board of directors, Blackwells Capital called for Foley to be fired “immediately.” The firm argued that various missteps on Foley’s part resulted in Peloton effectively squandering the sales boom it experienced in the early days of the COVID-19 pandemic.
“Remarkably, the Company is on worse footing today than it was prior to the pandemic, with high fixed costs, excessive inventory, a listless strategy, dispirited employees and thousands of disgruntled shareholders,” the letter says.
Peloton surged in value as homebound Americans invested in home fitness options during COVID-19 lockdowns. But shares have plunged more than 80 percent over the last 12 months.
Blackwells accused Foley of misleading Peloton’s investors about the company’s capital needs, “vacillating on pricing strategy” and hiring his wife as an executive, among other alleged failings.
The firm also ripped Foley for selling “stock regularly and repeatedly” in recent months during the downturn in the company’s fortunes.
“We believe that no Board exercising reasonable judgment could leave Mr. Foley in charge of Peloton. The Company has gotten too big, too complex and too damaged for Mr. Foley to lead it. And he should have enough self-awareness and enough self-interest, to resign as a director,” the letter adds.
The activist investor noted that “despite the incontrovertible mismanagement of the Company, Peloton has a large and loyal customer base, skilled employees, great technology and content, and a respected brand” that could be attractive to a buyer.
The firm floated several major companies, including Apple, Disney, Sony and Nike, as firms to engage on a potential acquisition of Peloton.
“Given the mess that Peloton has become as an independent company, we are convinced that one or more of these strategic acquirors could provide significantly more value, with substantially less risk, than Peloton is likely to generate for its shareholders on its own,” the letter says.
The Post previously reported on morale problems at Peloton. Foley faced internal criticism in December after moving forward with an invite-only holiday party for Peloton instructors, even as the company froze hiring and nixed a companywide event.
The move led one Peloton insider to say that “Company morale is at an all-time low.”
Last week, Foley publicly denied a CNBC report that Peloton was forced to halt production on bikes and treadmills as sagging demand resulted in a backlog of inventory.
Foley also claimed the company has identified a “leaker” who provided information to the media and would pursue legal action.