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Peloton Announces $1B Stock Offering As Losses Mount

During the pandemic, Peloton’s home exercise play was an undeniable winner, with soaring demand resulting in revenue doubling in 2020 from the previous year, despite delays and shortages.

By December, shares were trading for above US$160.

However, they may have played too hard, spending hundreds of millions to increase manufacturing amidst this demand, which has since slowed, as losses continue to mount.

Peloton announced a fortnight ago that its online workout subscriptions were falling, warning shareholders that 2021 revenue is likely to be 20 per cent lower than forecast.

However, CFO Jill Woodworth denied they needed cash, telling analysts just two weeks ago that, “cutting to the chase, we don’t see the need for any additional capital raise based on our current outlook.”

This week, things changed.

“While we are sufficiently capitalised,” a Peloton spokeswoman explained yesterday, “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.”

The company is now expecting to raise US$1.07 billion from its first offering since going public in 2019, pricing its shares at $46 apiece.

Peloton’s stock traded for $53 on Tuesday.

 

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