Those on Wall Street clamoring for beat-up Peloton to be sold to Apple, Amazon, Nike or anyone else with deep pockets may want to get reacclimatized with one stumbling block to any deal — Peloton’s cushy board of directors.
As part of the leadership shake-up announced by Peloton on Tuesday, now former CEO and founder John Foley will assume the role of executive chairman (he was already a board member). Outgoing Peloton president William Lynch will stay on the board as well.
Joining them on the board will be new CEO Barry McCarthy and two hand-picked Foley guys: Angel Mendez and Jonathan Mildenhall. Leaving the board will be Foley’s friend Erik Blachford.
The board construction still appears to be cushy and pro Foley, as seen by the graphic in a new 65-page presentation by Peloton activist investor Blackwells (below).
Considering this board arrangement with its deep connections to Foley —and the dual-class structure of Peloton’s shares that gives Foley voting control over any major matter —the path to getting a deal done may still be tough and well off in the distance.
“The board needs to be refreshed,” Blackwells — which is a 5% shareholder of Peloton — writes in the presentation.
For its part, Blackwells lists 12 companies that could be viable suitors for Peloton, led by names such as Amazon, Apple, and Nike. The activist thinks Peloton could be worth $65 to $75 in a deal.
Peloton said Tuesday it will also slash 2,800 jobs as it seeks to better align costs with slowing demand for its connected bikes.
Peloton aims to achieve $800 million in cost savings while also slashing capital expenditures by $150 million in 2022.
The company’s new CEO McCarthy, 69, is known on Wall Street circles as the innovative architect of Spotify’s 2018 direct listing. At Spotify, he was CFO for several years before retiring in 2019. He is seen as having a major passion for the numbers, in part reflecting his long-time serving as Netflix CFO. McCarthy has also been a board member of delivery startup Instacart for over a year.
Wall Street thinks a deal for Peloton will be made, but not for a while (likely in part due to the board makeup).
Oppenheimer analyst Jason Helfstein — who covers Peloton— says McCarthy is being brought in to stabilize Peloton’s fundamentals.
Once McCarthy does that — and given Peloton’s strong brand name — Helfstein believes Peloton will “probably get sold.”