Is Peloton Getting Acquired?

Like a nagging grandmother that keeps insisting on you getting a haircut, activist investors, Blackwells Capital, is nagging Peloton (NASDAQ: PTON) to put itself for sale once more.

Is a Peloton acquisition really on the cards though?

What’s Blackwells’ problem with Peloton?

It seems to be a case that Blackwells simply no longer believes in the vision and continues to push for a sale. This comes a little over two months after founder John Foley was replaced by Spotify and Netflix exec Barry McCarthy as CEO.

However, whether you agree with activist investors or not — and our Analyst Mike has some thoughts here — it’s always worth listening to what they have to say. 

The main reasons Blackwells claims to wish for a Nike or Apple to swoop in and acquire Peloton are:

• A lack of progress from McCarthy
• Better business options with a larger company
• Founder Foley’s perceived abundance of power

While some concerns about the business’s capability to build scale and the imbalance of power from Chief Executive Foley do hold some cause for concern, this reaction seems very premature.

McCarthy has been at the helm for less than a quarter, and while Peloton’s share price is down close to 20% in that time, external factors such as Ukraine, inflation, and recession fears have played their part. 

As well as that, Blackwells does only own a 5% stake in the company, so while this is not to be sneered at, it is also a case of realising that often, the loudest player is not necessarily the most important. 

Peloton’s rough ride will continue for some time, but we still see plenty of upside here at MyWallSt. McCarthy will need more time to implement his vision, and we’re looking forward to seeing how it plays out.