‘We are intrigued with the value of their subscribers’ and Peloton’s new CEO, says Bill Miller, founder of Miller Value Partners.
Investment icon Bill Miller, founder of Miller Value Partners, said the firm is considering an investment in the connected-fitness company Peloton (PTON) – Get Peloton Interactive, Inc. Class A Report.
“We don’t own Peloton now, because they’re in the midst of a massive restructuring,” he told CNBC on Wednesday.
“But we are intrigued with the value of their subscribers and [new Chief Executive Barry McCarthy’s] evident experience with that both at Spotify (SPOT) – Get Spotify Technology SA Report and Netflix (NFLX) – Get Netflix, Inc. Report. And it’s a great brand.” McCarthy had served as chief financial officer of both companies.
Peloton’s stock has plunged 67% in the past six months amid sluggish demand for its high-priced exercise bikes and treadmills. That led to the ouster of CEO John Foley, co-founder of the company, and to a 20% slicing of the corporate staff.
The stock has rebounded 53% in the past week amid talk that Amazon (AMZN) – Get Amazon.com, Inc. Report, Nike (NKE) – Get NIKE, Inc. Class B Report or some other company may buy Peloton. It recently traded at $37.15.
Peloton May Not Be the Answer to Apple’s Fitness Ambitions
But a potential takeover isn’t what interests Miller in the company. “We’re not betting on that. We’re looking at the fundamentals of Peloton and thinking about it,” Miller said.
His firm has a history with the stock. “We bought Peloton on the IPO; we sold it very close to the highs,” Miller said.
“My colleague [Samantha McLemore] actually talked about buying it again when it was below the IPO price [$29]. We missed it at least on that trade, but it’s one that’s on our radar here.”
For the current quarter, Peloton sees revenue of $950 million to $1 billion and an adjusted loss of $125 million to $140 million.
