Peloton investor Blackwells calls for the removal of CEO John Foley

• The investor believes that Foley is ill-suited to lead the company and must be removed

• Peloton’s stock has recorded a steep decline of more than 80% after its hare prices soared due to increased demand during the pandemic

Activist investor Blackwells Capital has pushed for the removal of Chief Executive John Foley of Peloton Interactive Inc. (NYSE: PTON) The investor that owns about a 5% stake in the exercise equipment maker, has started a sale process, as the latter sees a steep decline in its share prices which soared during the pandemic.

In a letter addressed to Peloton’s board of directors, Blackwells said that Peloton could be an attractive acquisition target for larger technology or fitness-oriented companies.

The investment firm founded by Jason Aintabi said in the letter, Foley is "ill-suited to lead the company and must be removed", and asked the board to begin the sale process to maximize the value of Peloton's brand, team, customer base, and technology.

Also Read: Peloton temporarily halts production of fitness products

Aintabi wrote that Peloton’s loyal customer base would be attractive to any technology, streaming, metaverse, and sportswear company such as Apple, Disney, Sony, or Nike. 

“Given the mess that Peloton has become as an independent company, we are convinced that one or more of these strategic acquirers could provide significantly more value, with substantially less risk, than Peloton is likely to generate for its shareholders on its own,” he wrote.

Fall from grace

Peloton initially saw a surge in business during the pandemic, as the demand for home-exercise products increased. Supply chain disruptions extended delivery times and limited the company's ability to meet the high influx of orders.

A product recall for its treadmill and concerns about demand in a post-pandemic world have contributed to the stock’s steep decline that dropped down drastically more than 80% from its highs last year. The stock hit a 52-week low of $25.81 on Monday.

Aintabi pegged the losses incurred by the shareholders to nearly $40 billion, while stating that Foley had sold stock regularly and repeatedly, reaping more than $115 million in proceeds.

Peloton is expected to report its second-quarter results on Feb. 8.

Read more: Peloton insiders sold shares worth $500 million before the stock’s fall

Picture Credits: Healthline