The Private-Equity Takeover Bell Is Tolling for Peloton

At least one PE firm has reportedly spoken with Peloton as it considers going private, but no deal is certain.

Photo of two people exercising on Peloton bikes
Photo via Peloton

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Nobody wishes it was 2021 again — except maybe Peloton.

The COVID-era unicorn is rather lifeless today, and private equity vultures are reportedly circling above its powder-coated steel frame. But hey, who aren’t they circling these days?   

Ride Like Lightning, Crash Like Thunder

Peloton was one of the breakout stars of the pandemic as waves of people looking to socially distance but also stay active shelled out big money for its line of exercise bikes, treadmills, and rowing machines — and don’t forget subscriptions to its fitness app. Between 2020 and 2021, the company’s revenue increased 120% to more than $4 billion.

But then, all at once, it seemed like everyone started going for actual bike rides and Pelotons became just another way to dry wet towels:  

  • Peloton has suffered more than a dozen consecutive quarters of losses, including $167.3 million in its most recent quarter. Its market cap has dropped to $1.5 billion from roughly $50 billion in 2021. Massive amounts of equipment were recalled last year, and the company announced it was cutting 15% of its workforce in the past week. In addition, CEO Barry McCarthy stepped down just a few days ago.
  • With all the tell-tale signs of a dying business, Peloton has become the target of private equity firms, CNBC reported. People familiar with the matter told CNBC at least one PE firm has spoken with Peloton as it considers going private but details are still under wraps and no deal is certain. Shares of Peloton surged roughly 15% on the rumors Tuesday.  

Gym Amenities: Sitting on top of Peloton’s problems is about $1.7 billion in debt, and the company recently told shareholders it was working with JPMorgan and Goldman Sachs on a refinancing strategy. Something tells us Peloton’s recently announced partnership with Hyatt to stock 800 hotels with exercise equipment likely won’t be its saving grace.