Peloton (NASDAQ:PTON) soared in trading following a CNBC exclusive report indicating that several private equity firms are deliberating a potential buyout of the exercise equipment company. This comes despite the company’s efforts to refinance its debt and achieve profitability after enduring 13 consecutive quarters of losses.
The report did not mention the names of the private equity firms involved in the discussions. It also stated that there is no guarantee of a deal and that PTON could remain a public company. A Peloton spokesperson told CNBC that the company did not “comment on speculation or rumors.”
Peloton’s Business Woes
Peloton’s exercise subscription business has faced challenges due to the costly manufacturing of its equipment, and frequent recalls that have turned loyal customers away from the brand. In addition to this, the company is facing reduced demand for its expensive exercise equipment as customers across all income groups pull back on spending.
If this were not enough, the company has been on a downward trajectory over the past two years. Its sales have declined, and it has struggled to achieve profitability amidst these challenges.
Last week, PTON announced the exit of Barry McCarthy as President, CEO, and Director of the Peloton Board and laid off 15% of its employees.
Is PTON a Good Stock to Buy?
Analysts remain sidelined about PTON stock, with a Hold consensus rating based on five Buys, 14 Holds, and two Sells. Over the past year, PTON has tanked by more than 40%, and the average PTON price target of $6.29 implies an upside potential of 53% from current levels.
