(Bloomberg) — Peloton Interactive Inc. jumped as much as 8.2% on Tuesday, erasing a premarket drop of almost the same after the fitness company said it will sell about $1 billion of stock.
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The share offering follows a 45% decline since Peloton slashed its annual revenue forecast by as much as $1 billion on Nov. 4 amid lower projections for both subscribers and profit margins coming out of the pandemic.
Short interest in Peloton comprises 9.5% of the public float, according to data from financial analytics firm S3 Partners. 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 and JPMorgan, 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.
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, a Peloton spokesperson reiterated that the company is “sufficiently capitalized,” adding that “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.”
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 cash position and comment from spokesperson.)
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