What Is Peloton Worth?

John Foley is stepping down as C.E.O. of Peloton.Credit…Jeenah Moon for The New York Times

Shifting gears

Where is Peloton headed? As its fortunes have waned, the once high-flying maker of connected fitness bikes faces pressure from activist investors to cut costs and frenzied speculation on Wall Street that it may need to sell itself.

In the latest twist, the company announced today that its co-founder and C.E.O. John Foley — the target of some activists’ ire — is stepping down and will become executive chairman. Peloton’s new chief will be Barry McCarthy, the former C.F.O. of Spotify and Netflix. On top of that, Peloton announced plans to cut about 20 percent of its corporate work force, or some 2,800 jobs. Separately, the company said it lost $439 million in its most recent quarter, and lowered its full-year forecasts for revenue, subscriptions and profitability.

“We are open to exploring any opportunity that could create value for Peloton shareholders,” Foley told The Wall Street Journal. Peloton’s combination of hardware and subscription-based businesses makes it potentially attractive to a range of potential buyers, from Amazon to Apple, Nike and others. As its share price swings — up yesterday on M.&A. speculation, down today on the restructuring news and way, way down from its pandemic peak a year ago — it raises a key question: What is Peloton really worth?

Activists are bullish about a deal. Blackwells Capital, which has been calling for an overhaul at Peloton in recent weeks, said this morning that the moves “do not address any of Peloton investors’ concerns,” which it recently spelled out in a 65-slide presentation. It accuses Foley and the board of mismanagement and lists more than a dozen possible buyers of the business, which it says could pay $75 per share and still make money, according to “myriad valuation metrics.” That’s well over 150 percent of Peloton’s current market cap of around $10 billion.

Others aren’t so sure. Peloton’s sales have slowed as people return to gyms, and the planned layoffs reflect that the company may need to cut costs after expanding rapidly earlier in the pandemic. Of the companies that could consider acquiring Peloton, market watchers we’ve spoken to have doubts: Lululemon’s acquisition of Mirror hasn’t gone well; Nike doesn’t have a great track record of takeovers and is focused on its own brand; Alphabet faces tough antitrust scrutiny (see: Fitbit); Amazon may not care enough about the size of Peloton’s market; and private equity buyers would want a clearer path to profitability.

Or, put another way, “the largest companies in the world want to buy a growth story, not a fixer upper,” Simeon Siegel, an analyst who covers the company for BMO Capital Markets, told DealBook.

All eyes are now on Foley. His new job does not change the fact that he and other insiders control a majority of Peloton’s shares, and thus will decide on a potential sale. He is sure to face questions about Peloton’s path as an independent company during its earnings call, which was moved up to this morning.


Nvidia calls off its takeover of Arm. Nvidia withdrew its multibillion-dollar bid, the biggest ever for a chip company, amid stiff opposition from regulators in the U.S. and Britain. SoftBank, Arm’s owner, will instead take the company public. Speaking of which…

SoftBank’s quarterly earnings plunge amid pressure on its investments. The Japanese tech giant said its fourth-quarter earnings fell 97 percent from a year ago, when its portfolio of investments was soaring. That adds to the company’s mounting challenges, which include senior executive departures and investments like WeWork and Grab that have fallen in value.

BP reports a record profit. The British oil and gas producer said it earned $12.8 billion last year, its biggest profit in eight years, as commodity prices soared. That follows Shell reporting huge profits as well, but British politicians have called for a windfall tax on some energy producers to offset rapidly rising consumer prices.

Peter Thiel chooses politics over Meta. The tech billionaire is stepping down from the board of Facebook’s parent company, where he has sat since becoming one of its first major backers, to concentrate on politics. He has given millions of dollars to political candidates aligned with former President Donald Trump.

Warner Bros. is sued by the producer of “The Matrix Resurrections.” Village Roadshow sued its longtime studio partner, saying Warner Bros. deliberately rushed to release the movie in December on HBO Max as well as in theaters. That helped the streaming platform but, Village Roadshow said, hurt the movie, which earned only $37 million at the box office.

Exclusive: Michael Moritz and John Doerr come together on carbon-tracking deal

Watershed, a tech start-up that helps companies measure and manage carbon emissions, has raised $70 million at a $1 billion valuation, DealBook is first to report. The funding was led by two Silicon Valley heavyweights — Sequoia’s Michael Moritz and Kleiner Perkins’s John Doerr — who last invested together in Google. As part of the deal, Mark Carney, the former Bank of England chief, and the diplomat Christiana Figueres, both of whom have managed climate initiatives at the U.N., are joining Watershed as advisers.

The deal is a sign of the value that investors see in climate data as companies come to grips with their carbon footprints. And the union of rivals Doerr and Moritz underscores Silicon Valley’s enthusiasm for “cleantech” deals.

Watershed aims to become the go-to tool for carbon tracking. The company, whose clients include Airbnb, Everlane, Stripe and Warby Parker, created a platform for companies to track emissions, including in their supply chains, and to help identify the best ways to reduce their carbon footprints, said Taylor Francis, a Watershed co-founder. The start-up’s tool will one day become as fundamental as cloud computing, accounting or HR systems, Moritz told DealBook: “Imagine doing business without AWS or SAP or Workday or Salesforce.”

For venture capital, climate tech is hot. Venture investors more than doubled their spending on the sector last year, according to PitchBook, reflecting rising interest and action on dealing with the threat of climate change. About one-fifth of the world’s largest public companies have made pledges to achieve net-zero emissions.

Silicon Valley has tried to tackle global warming before, with mixed results. Kleiner Perkins, for its part, raised funds to invest in cleantech in 2008, but several of its bets, including Think Global, a Norwegian electric-car company, and MiaSolé, a solar-panel producer, faltered. Doerr, who wrote “Speed and Scale: An Action Plan for Solving Our Climate Crisis Now” last year, said he learned from the experience. Unlike some software deals, “backing new innovative carbon reduction ventures requires, typically, more capital and more time, more grit, more money,” he said.

“It’s one of the biggest industrial transformations probably in the history of capitalism.”

— Scott Keogh, the C.E.O. of Volkswagen Group of America, on the rapid growth of the electric car industry. Automakers are on track to invest half a trillion dollars in battery-powered vehicles in the next five years.

Congress talks corporate concentration in crypto

Late last year, financial regulators called on Congress to write legislation on stablecoins, cryptocurrencies pegged to the value of stable assets like the dollar. Today, the House Financial Services Committee begins this journey by holding a hearing with Nellie Liang, the undersecretary of the Treasury, who recently led a President’s Working Group investigation of the booming stablecoin sector that raised alarms in Washington.

They are likely to discuss the obvious, like how to ensure stablecoins are backed by assets as issuers claim, as well as trickier issues, like antitrust. Liang will highlight two concerns about the potential concentration of power in the industry, the Treasury spokesman John Rizzo told DealBook, and she’ll tell lawmakers, again, that legislation is the “best option” to address them.

Stablecoin issuers are not subject to the rules that restrict banking and commercial ties. The crypto tokens are issued by private companies that are regulated under a patchwork of state laws. The links between these issuers and other businesses raise policy concerns, “such as advantages in accessing credit or using consumer data to market or restrict access to products,” Rizzo said.

Domination by a big player may end up raising prices and limiting innovation, Liang will also tell lawmakers. Concentration in the stablecoin market worries Congress, a financial services committee aide said. When Facebook announced plans to issue the stablecoin Libra, it faced regulatory resistance and had to shift gears before giving up on the project last month. Other big companies are making moves: Walmart recently filed trademark applications that indicate it’s venturing into crypto, and some believe that the Biden administration intends to steer the stablecoin industry into the arms of banks.

There will be many more conversations about crypto to come. The Senate Agriculture Committee will meet tomorrow with the C.F.T.C. chairman, Rostin Behnam, for its first hearing on digital assets, but probably not the last. The Senate Banking Committee will hold a hearing on stablecoins next week and, behind the scenes, some senators are polishing the bills they plan to propose shortly after.



  • Reddit is reportedly focused on building up its ads business as it prepares to go public. (FT)

  • The French telecom company Iliad has reportedly offered to buy Vodafone’s Italian operations. Meanwhile, a second activist investor has taken a stake in Vodafone, but says it supports the company’s management. (Bloomberg)

  • A hedge fund wants to oust the Marciano brothers, who founded the clothing label Guess, from the clothing company’s board as one of them faces sexual misconduct allegations. (WSJ)

  • The dating app Bumble has bought a French rival, Fruitz, in its first acquisition. (CNBC)

  • The secondary market for private equity funds soared last year. (Lazard)


  • President Biden said the U.S. would “bring an end” to the Nord Stream 2 gas pipeline connecting Germany and Russia if Moscow invades Ukraine. (NYT)

  • The U.S. and Japan agreed to scale back Trump-era steel tariffs. (NYT)

  • A Swedish price-comparison site is suing Google for $2.4 billion, accusing the American search giant of illegally favoring its own competing service. (CNBC)

  • The I.R.S. will stop using facial recognition software from to help authenticate taxpayers. (NYT)

  • Tesla disclosed that it faces new inquiries from the S.E.C. and a California regulator on a range of issues. (NYT)

Best of the rest

  • In Spotify news: Neil Young urged employees to leave “before it eats up your soul,” and the C.E.O. of the conservative-leaning streaming platform Rumble offered Joe Rogan $100 million to leave Spotify. (Insider)

  • The Barstool Sports founder Dave Portnoy sued Insider over news articles that quoted women who accused him of sexual misconduct and assault. (WaPo)

  • Inside the #MeToo controversy that led to the ouster of a top Axel Springer editor. (FT)

  • Amazon more than doubled its cap on base pay for corporate employees to $350,000, citing the competitive job market. (NYT)

  • “Mapping the Celebrity NFT Complex” (Read Max)

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