Peloton Should Put Itself Up for Sale and Fire Its CEO, Activist Investor Demands (cnn.com) 53
The knives are out for Peloton and CEO John Foley. From a report: Blackwells Capital, an activist investor that owns less than 5% of Peloton, says it has "grave concerns" about its performance and is calling on its board of directors to fire Foley immediately and explore a sale. In an open letter Monday, the investment firm sharply criticized Peloton for not capitalizing the success it achieved in 2020, saying it squandered the opportunity to grow sales of its internet-connected bikes and treadmills. Peloton shares have tumbled 80% from their peak, bruised from sagging sales, a massive recall and PR nightmares in popular TV shows. Blackwells' Chief Investment Officer Jason Aintabi said the company is currently on "worse footing today than it was prior to the pandemic, with high fixed costs, excessive inventory, a listless strategy, dispirited employees and thousands of disgruntled shareholders." To turn around Peloton's fortunes, Blackwells suggests firing Foley for his "repeated failures," listing 10 examples. They include his pricing strategy (Peloton cut the price on its Bike and Tread in August 2021, only to raise them again months later), his handling of the treadmill recall and a purported temporary shutdown of production. Blackwells also slammed Foley for hiring his wife as a key executive.
On the one hand... (Score:2)
... at least they listed some specific examples, so that's at least better than calling for someone's ouster without bothering to back it up with anything.
On the other hand... they own 5% of the company, so if they think it's a loser stock long-term, why not just dump it and buy something else? Investments are essentially gambling. Sometimes the bet pays off, sometimes you lose your shirt. It's not guaranteed income like so many investors today seem to treat it as. If the company does something you don't ag
Yup, I really hate that CEO accountability (Score:4, Insightful)
If the company does something you don't agree with, sell your stake and find somewhere else to put your money.
I'm personally thrilled that activist investors are holding executives accountable, especially over corruption issues, like hiring your wife. Someone has to. The gov has no authority. The workers aren't going to. I don't think customers are going to. They are only concerned with the product. While activism can obviously misfire when a crazy person is making accusations. I WANT corporate boards to feel like if they cross a certain line, someone will hold them accountable because it doesn't seem like anyone else is. For far too long, they've gotten by with nearly anything and everything their heart desired. It's nice to see a check on their power.
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Mod parent "Funny over Insight". And thanks for fixing the vacuous Subject.
However the joke does run on long, and gets confused near the end. Or is this actually Poe's Law in action?
However the Subject I was looking for was "Better to fire the activist investor". Phucking blackmailers in general, though some of them are just short-sighted greedy fools playing games to get more money they still don't need. (But none of this really invests how insane the stock markets have become over the centuries.)
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Shareholders, even if they have even share of voting stock, have a right to make their displeasure known. i agree that at 5% (not an insignificant amount, but far from sufficient) their demands are pretty empty. But keep in mind that it's not much different than a member of Congress making a stink. Sure, one vote isn't going to topple any particular government official or piece of policy, but in both cases they've paid to play, and if they can convince enough other shareholders to go along with them at a sh
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Again, I mostly think you're talking about days of yore, though I should clarify that I was mostly focusing on vulture capitalists and other creators of destruction in pursuit of insane and imaginary profits. It shouldn't be a crime to earn an honest profit, even if it's smaller than it could be, but these days any company that settled for an honest profit might as well kill itself yesterday. And I don't think shareholders should have any right to scream that they think the profits should be bigger than wha
It's not accountability (Score:5, Informative)
Activist investors aren't activists. What they are almost always trying to do is not improve the company's bottom line but make a quick buck at the expense of the company's long-term stability and prospects. One of the most famous examples is an investor who was trying for years to tank Olive garden stock because he wanted to buy the company up and sell off the land it owned for cheap.
Another much less famous example of the same scam is why you can't read monthly science fiction anthologies anymore. Back in the late sixties all the various science fiction anthologies like asimov's tales distributed their books through a single company. It just so happens that single company owned a ton of lands that had appreciated massively over the years. A rich asshole noticed and he noticed how undervalued the distributor company was so he bought it in liquidated it. This left the science fiction monthlies without a distributor and they promptly collapsed. Remember this was the '60s and you couldn't just spin up a company like you can today.
All this is before we talk about companies like Bain Capital that gut companies like a fish.
The point is when you see the phrase activist investor you need to take that with a mountain of salt. It is almost certainly a rich schmuck trying to gut the company. Capitalism cannot function when companies are constantly being preyed on like this. It ceases to be a free market when people with that much power are using it that recklessly and destroying that many companies in the jobs that go with them
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Private equity like Bain often don't even deal with publicly traded orgs. Private companies can't be subject to hostile take overs, the whole private part means nobody can make you sell it.
Its really the same with public companies too. The only way the activists get enough ownership interest is they are willing to pay the original investors enough they will turn loose of their shares! A companies reason for existence is to MAKE MONEY. if some gets a large enough interest to get a boardroom seat or something
Re did you even read my post? (Score:2)
As the saying goes this is why we can't have nice things. Dozens of high quality businesses that employed people at good
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The problem then is you can get into a football/soccer scenario we see again and again with rich billionaire investors where they keep sacking the manager, expecting somebody to produce vastly different results with the same group of players, and there is no stability in the overall direction.
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ahhh, a Chelsea fan i see :)
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... at least they listed some specific examples, so that's at least better than calling for someone's ouster without bothering to back it up with anything.
On the other hand... they own 5% of the company, so if they think it's a loser stock long-term, why not just dump it and buy something else? Investments are essentially gambling. Sometimes the bet pays off, sometimes you lose your shirt. It's not guaranteed income like so many investors today seem to treat it as. If the company does something you don't agree with, sell your stake and find somewhere else to put your money.
Some investors go into poorly run companies like this, because they believe that the price is very low and if they fix the problem - replace the bad CEO and get the governance and vision fixed so other investors no longer avoid the company - they'll often have earned quite a bit of cash. And if they manage to sell the company.... That's a really good payday.
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Why not sell? Because that would be locking in an 80% loss on those assets, which is a great way to get yourself fired at an investment firm. Instead, make a bunch of noise and try to get someone else fired and recover some of that lost value.
And, let's face it, Peloton has basically snatched defeat from the jaws of victory here - they were dealt 4 aces with the pandemic in 2020 and squandered that surge of sales and growth on making flawed follow-on products while the competition matched up with their co
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Why not sell? Because that would be locking in an 80% loss on those assets, which is a great way to get yourself fired at an investment firm. Instead, make a bunch of noise and try to get someone else fired and recover some of that lost value.
And, let's face it, Peloton has basically snatched defeat from the jaws of victory here - they were dealt 4 aces with the pandemic in 2020 and squandered that surge of sales and growth on making flawed follow-on products while the competition matched up with their core product offering for cheaper.
So they out-GoPro-ed GoPro?
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"Activist investors" mean investors who buy a stock thinking that with enough shares and influence over the board, they can guide the company along a more profitable route. That is, their expected advantage is that their input.
It's different from investing in something because you believe in the company.
This is why investors shouldn't run companies (Score:4, Interesting)
When shareholders demand dumb things like selling the company to some other company to strip mine it for the brand name and scrap it for parts, then they are not investors - they are scum. The value of a company is more than the amount of money you can sell it to some bigger entity - it is more than the capital, it is people.
People with lots of money tend to objectify things - that's how they get so much money. They are an optimization to a bad problem. An inhumane problem. It's the same with Bitcoin and NFTs. At the end of the day, our power dynamics put in place garbage people at the top so that garbage people near the top can behave in terrible ways.
We don't need socialism to fix this, we just need common decency. Will the activist shareholder win, or will they be out-voted by the masses? We'll see....
Re:This is why investors shouldn't run companies (Score:4, Interesting)
The value of a company is more than the amount of money you can sell it to some bigger entity
Nope not really - the value of anything is what someone else will pay for it. As to the people you know when a company like PTON is bought out they don't usually just fire everyone right? Nope unless the business is such a basket-case that its only value is some good will associated with brand name usually most of the staff gets retained. Maybe some support staff gets let go because they become redundant don't need/can't have more than one VP-HR really. Of course lots of people also quit because they suddenly see the career path they envision - "I am going to get promoted to director of .... and then..." become nonviable. Its not everyone just gets show the door.
I suspect Slashdot has a kind warped perspective on it because some many of the readers are/were IT staff (support staff) that is the most likely to be made redundant.
Many companies really are cases where the parts are worth more than the whole. PTON may or may not be one of them I don't know enough about it; but just because an investor wants to liquidate a company does not make them 'scum' there are lots of cases where a company just isn't working and really can't be fixed yet has assets that might work in a broader portfolio.
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Nope not really - the value of anything is what someone else will pay for it.
If you go by strict dictionary definitions, then sure. I think what he was getting at though was that the value of a thing isn't always readily apparent, especially to a shortsighted and risk averse market. If we made decisions only based on value *right now*, we'd still be sitting in a cave beating gronk over the head with a club because the time he spent making that weird round thing when he could have been hauling fish back from the river and generating actual value wasted the shareholders money.
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Okay take a step back look at what has attracted a shit load of investor capital lately - people are plowing money into electric vehicles, solar, chips, space, etc - because these things are profitable - most of them not until very recently.
Risk is how you get reward. investors take lots of risk. Actually all the easy money has had a lot of investors taking a lot of probably baaaad risks. They wheel Gronk is working on has a net present value - its potential as future labor saving device vs the risk it does
This isn't dumb at all (Score:3)
We stopped properly regulating capitalism in this country and as a result it's gradually collapsing into a sort of neo-feudalism. That's why you're seeing as much instability as you
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Good luck with that. We've spent most of the past century defining capitalism as caring about nothing but the bottom line. Boards of directors can actually get in trouble with shareholders for putting decency ahead of profits. You're absolutely right that we need to fix the situation, but it's going to take an enormous effort to change things to the point that companies put anything before profits.
Color me shocked (Score:5, Insightful)
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Should have been FP and calls for more mod points, too. (My earlier comment included an alternate Subject.)
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unfortunately that doesn't mean the rich a$$hole is wrong.
the ceo does sound like he's made several bad decisions.
those bad decisions could cause other investors to lose money and peons to lose jobs.
maybe the sale to someone who can actually run the company properly will result in less people losing their jobs.
not saying it's likely, just that it's possible. the current CEO might run it into the ground, bankrupt the company and then everyone loses their jobs anyways.
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He's going to game it so no matter what he wins. Either he drives the price down over the next few weeks/months, meaning he can buy a LOT more on the cheap, and force the company to do what he wants while lining his own pockets... or he causes some short-term bump in the stock that is high en
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And peons losing jobs? That happens when the company stops growing, and he tired to give 10 reasons why the curre
Ehh... (Score:2)
Ehh... They sell multi-thousand dollar exercise bikes / treadmills, that use expensive subscriptions. There's sort of a finite number of suck^H^H^H^Hpeople who can afford that crap, end even they will only get it if it becomes a fad during a lockdown. How do you expect growth from there, it happened, you had your opportunity to cash out your 5% and invest it in something with actual prospects.
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Boo hoo to the shareholders, but we have enough planned obsolescence with products.
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Not every business needs to keep growing and growing, sometimes maintaining is good enough.
Yes that is perfectly fine with huge classes of share holders, they are there to sit back and let a profitable company pay them dividends. Want know PTON's dividend is .... wait for it .... $0
Either you invest for asset appreciation, dividends, or both. if you are seeing none of those you as an investor are very right to demand changes or sell!
Look, their core customer are serious cyclists (Score:3)
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And even that customer demographic don't need Peleton. Most of them have smart trainers, which are much more platform agnostic, and allow them to hook up the same bike they use on the road. Being platform agnostic, they then have a number of choices for how to train. Most of them are on Zwift, so far as I
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who need to train in inclement weather. Or at least people who think they are serious cyclists. I follow professional road racing, and have been watching Peleton commercials since they started in 2012. Really tired of watching them, since there aren't many other companies that buy the spots. The sudden lockdown lead to explosion of people interested in working out at home. It wasn't going to last. They just need to make some extra profits, and return back to their niche. Ok, now they have treadmills for that crowd, too. Anyone who invested thinking that this business was going to boom forever really didn't do any basic research.
I'm not sure that's true. Serious cyclists ride outside, they would have been relatively unaffected by the lockdown, they might even have spent more time training outside since the road was clear of cars.
The target demographic is basically the same as spin class, upper middle class folks who want to stay fit.
The pandemic decimated spin classes, so all those people used to getting their workout by biking inside with a bit of external motivation simply got Peletons and did it at home.
Long term, I'm no
Why Peloton? Why here? (Score:1)
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Slashdot is news for nerds and stuff that matters.
Personally I do not believe that Peleton is really news nor that it matters.
But weirdly, it is seen as a Tech company and the stock was lumped in with other Tech companies, presumably to have those stock lines that we want to move up, move up further than it would normally do.
There's been a lot of claims of Peleton being the "Apple of Fitness" etc. and they do offer a decent UI from what I hear.
So it's not the worst story ever on Slashdot...
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I think you're feeding a troll, but I could go into detail on the why it should matter much more than it does so far. Shortest answer is that Peloton (mostly) implemented a business model I was trying to "sell" in a CS research lab about 15 or 20 year ago...
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Why is Peloton on Slashdot?
Probably because at some point this site assumed the I.T. demographic probably has a lot of disposable income to dabble in investing. That's probably why there's constant shitcoin stories, too.
They're probably not wrong, if you managed to land a decent job in the tech industry you probably do have some sort of investment portfolio. Of course, if you're just a tech enthusiast and don't work in I.T., seeing some of the things people on here spend their money on can be a real headscratcher.
Not News - This is What Activist Investors Do (Score:2)
Seriously. Google search: activist investor calls for sale -peloton
This is why they're activist investors. All they care about is return on stack investment. Sale normally results in a jump in stock price. The end.
It's like saying, "Critics of president don't like something about the president."
Sounds like an investor didn't know anything. (Score:2)
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Another good candidate for FP, but it depends if he bought the shares planning to cannibalize the company. My first comment in the discussion says more on such...
Got a Peloton Bike for Christmas (Score:5, Interesting)
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Deserves more Interesting moderation.
But would you be interested in the ultimate modular bike? Start with the basic Peloton, but add modular wheels and make the display removable for riding on the street when you aren't using it as an exercise bike (but with a modular option to feed off of systems like Google Streetview?). Now add a big battery for battery-assisted travel, and a generator module for charging the battery when its in exercise-bike mode. Now you can opt-in for the disaster-response module.
When
Peleton can burn in hell (Score:1)
I'll never buy anything from them, for no other reason than them buying so much advertising space a couple years ago that even my ad-averse, hysterical ad-avoidance-strategy ass couldn't avoid seeing their fucking overpriced el-cheapo TV-equipped treadmills being flogged in every conceivable media several times a day.
I make a habit of avoiding products from manufacturers that overdo it on the ads. But Peloton holds a special place in my hate hall of fame. And I'm not the only one.
More likely (Score:2)
A big recall didn't help. It also doesn't help that with people going outside again, very expensive coat racks are in less demand.
Yeah, and that hula-hoop guy too! (Score:2)
How dare he stand by and let a fad end! And those covid vaccinations have hit the bottom line too. Fucking moron!
It all euphemism (Score:2)
Don't understand. (Score:1)
How I read the title (Score:2)
"Peloton Should Put Its CEO Up for Sale and Set Itself on Fire"
I blame casual dyslexia for accidental slavery and arson.
"Internet connected" is the last thing I want (Score:2)
The IoT and "internet connected' appear to one of the favourite buzzwords among all the uninformed investors these days. Look, it's internet connected! You can charge X% more for your product now and everyone will want one!
Bollocks.
Internet components in most devices are an overkill and not needed at all. Bikes and treadmills in particular. They are there to serve a fitness function, not to be a connected and/or multimedia device, and more connected devices is the last thing I want in my house. The least th
Peloton is an awesome niche product (Score:2)
The market for high-end equipment is always going to have a ceiling because at some point the price of the equipment starts to cut into other budget items. Without the pandemic, Peloton's crazy fast sales growth was never sustainable. Before COVID, the Peloton bike was a pretty niche product. It's awesome, but it's also pretty niche. It's also heavy and large. Honestly, I would love to buy a Tread, but there's nowhere to put it.
Peloton is a luxury, lifestyle product. For owning a Bike or Tread to make sense