Peloton files to sell $1 billion in stock offering, shares drop

Cari Gundee rides her Peloton exercise bike at her home on April 06, 2020 in San Anselmo, California.

Ezra Shaw | Getty Images

Peloton said Tuesday it plans to sell an additional $1 billion of its Class A common shares, as the connected fitness equipment maker looks for ways to come up with cash amid slowing momentum for its products.

Affiliates of Durable Capital Partners and TCV, and accounts advised by T. Rowe Price Associate have expressed an interest in purchasing shares, Peloton said.

The company expects to grant the offering’s underwriters a 30-day option to purchase up to another $150 million of shares at the public offering price, less discounts and commissions.

Peloton didn’t detail how it would use the extra funds.

Stock offerings are often pursued by public companies to take advantage of a growing share price, but Peloton’s market value has plunged this year. Its shares were down around 3% in extended trading Tuesday after the news, having fallen nearly 70% year to date. Shares had closed Monday down 3.5%, after touching a fresh 52-week low of $46.70 earlier in the day.

When the company reported a wider-than-expected loss in its fiscal first quarter earlier this month, it also slashed its outlook for revenue for the year by as much as $1 billion.

The company has poured money into marketing, launching new products and bolstering its supply chain. As consumers cool on at-home fitness, however, analysts and investors worry those investments might have been ill-timed.

The company has also put a temporary freeze on hiring to try to reel in expenses.

Find the full press release from Peloton here.

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