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Peloton Stocks Soar 14% Amidst Potential Private Equity Buyout
May 8, 2024
Despite Peloton’s recent best efforts — including partnering with Hyatt on a new loyalty program — the fitness company continues to financially struggle. Last week, CEO Barry McCarthy stepped down from his role, and the company announced its plans to reduce its global workforce by 15%.
But a new report from MarketWatch suggests that things may be turning around for the beleaguered brand.
The outlet has revealed that after 13 quarters of losses, Peloton’s stocks rose 14% in pre-market trading, and shares closed more than 15% higher, after news of a potential private equity buyout.
Private equity firms are reportedly eyeing the brand’s current operational structure to see how costs can be cut. According to the outlet, cutting these costs will make the brand more attractive for a buyout.
What’s more, the current restructuring — which includes cutting the global workforce by 15% — is projected to cut annual run-rate expenses by $200 million by the end of the fiscal year 2025.
CNBC, meanwhile, reports that these annual run-rate expense cuts are important to offset the company’s growing debt.
“Its debt totaled about $1.7 billion as of March 31. The company owes $692.1 million on its term loan, which could mature as early as November 2025, and $991.4 million on its 0% convertible senior notes, which are due in February 2026,” the outlet explained, citing Peloton’s quarterly securities report for the statistics.
“Overall, our refinancing goals are to deleverage and extend maturities at a reasonable blended cost of capital,” Peloton said in a statement. “We are encouraged by the support and inbound interest from our existing lenders and investors and we look forward to sharing more about this topic.”
There is, however, no guarantee that a private equity firm will indeed purchase Peloton. If a private equity buyout does not happen, the fitness company will remain a publicly owned company, and there’s no telling what that means for the price of the stocks or the future of the company.
For its part, Peloton refused to issue a statement on the record about the potential buyout because the talks with the firms are private.
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