(Bloomberg) — Peloton Interactive Inc. jumped as much as 15% after the fitness company announced plans to sell about $1 billion of stock, offering relief to investors rattled by a grim forecast earlier this month.
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The shares rose as high as $54.45, marking the biggest intraday gain since March. The stock had declined 45% since Peloton slashed its annual revenue forecast by up to $1 billion on Nov. 4. The company also lowered its projections for subscribers and profit margins, renewing concerns that the end of the pandemic would bring a prolonged slump.
This is the first public offering in Peloton since its 2019 initial public offering at $29 per share, according to data compiled by Bloomberg. Goldman Sachs Group Inc. and JPMorgan Chase & Co., the two lead banks on the IPO, are underwriting the new deal.
On its quarterly earnings call earlier this month, Peloton said it underestimated the impact of economic reopenings on people’s desire to continue working out from home. Its fiscal first-quarter results missed analysts’ estimates for revenue and loss per share. But another figure also caught analysts’ attention: Free cash on hand shrank by about $680 million from the previous quarter, leaving Peloton with about $924 million of cash and equivalents.
Short interest in New York-based Peloton has grown this year. It comprises 9.5% of the public float, according to data from financial analytics firm S3 Partners.
Analysts peppered executives on the earnings call with questions about the cash situation, and Chief Financial Officer Jill Woodworth said, “We don’t see the need for any additional capital raise based on our current outlook.”
In a statement Tuesday, Peloton reiterated that the company is “sufficiently capitalized.”
“We see an opportunity to expand our liquidity position to ensure we are making the best strategic decisions for Peloton’s medium and long-term growth opportunity,” Peloton said.
Durable Capital Partners LP, TCV and funds and accounts advised by T. Rowe Price Associates Inc. have expressed an interest in buying shares in the offering, Peloton said in a statement.
Peloton’s offering priced 23.9 million shares at $46 each. The company expects to see net proceeds of $1.07 billion.
(Updates with more background on Peloton starting in fifth paragraph. A previous version of the story was corrected to remove a reference to a buyback.)
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