Peloton is looking at possibly selling a sizable minority stake in an effort to improve its business amid sinking fortunes, The Wall Street Journal reported Thursday (May 5), citing sources familiar with the matter.
The company is reportedly targeting potential investors, including industry players and private equity firms, which could end up with a stake of 15% to 20%. The new capital could help Peloton out as it tries to reform its business.
The company was riding high early in the pandemic as customers couldn’t go out and needed home-based workout material. However, things got worse for the company as things opened up again in late 2020 and early 2021, with gyms filling up again.
The report noted that the new capital might also be a vote of confidence if an established private equity firm or tech giant is among the suitors. Amazon is among those that have wanted to buy the company in the past.
Since Peloton began having trouble, it brought in a new CEO and cut thousands of jobs in early February. However, shares have continued to fall since then, despite the company’s efforts.
The discussions are still at an early stage and a deal might not go through.
Earlier this month, PYMNTS reported that Peloton was cutting the price of its three main connect fitness products, while also hiking the cost of subscription — both attempts to generate more recurring revenue.
Read more: Peloton Hikes Subscription Fees, Cuts Hardware Costs
The price of Peloton’s bike is set to drop $300 to $1,195. Meanwhile, the higher end Bike+ will cost $1,995, which is a $500 cut in price, and the treadmill will drop by $150 to $2,345.
The company said it wanted its products to be more affordable and that it was a “strategic decision to play for scale” and boost market share. Subscriptions are set to rise to $44 per month in the U.S., which is intended to offset the equipment price reductions.
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