Why This Peloton Analyst Thinks John Foley's Exit Increases The Possibility Of A Sale

Peloton Interactive, Inc. (NASDAQ: PTON) announced a leadership transition on Tuesday, along with restructuring measures as it grapples with slowing growth in a post-pandemic economy.

An analyst at Wedbush is of the view the announcements set the stage for an eventual takeover of the company

Peloton Faces Fork In The Road Path: Peloton founder and CEO John Foley's relinquishing of office and his transitioning to the role of executive chair sets up a "fork in the road path" for Peloton in the months ahead, analyst Daniel Ives said in a note.

Foley holds a supermajority of the company's B shares and ultimately controls the fate of Peloton, the analyst noted. Shareholder pressure will eventually build to solicit bids and sell Peloton to a strategic partner, with potential bidders likely to be Apple, Inc. (NASDAQ: AAPL), Amazon, Inc. (NASDAQ: AMZN) and Nike, Inc. (NYSE: NKE) , the analyst said.

Related Link: Does A Potential Peloton Acquisition Make Strategic Sense For Apple?

Peloton will likely spin a path of restructuring and growth ahead with the new CEO, Ives said. The reality is that Foley was the "pilot on the Peloton growth plane," he added.

"If Peloton tries to go alone ahead, not sell, there are cautionary tales of troubled consumer products in cost cutting mode that have been down this path with Fitbit and GoPro coming to mind in darker stories," Ives said in the note.

Apple Likely Acquirer: Foley's departure makes it more likely that Peloton ultimately sells the company, Ives said. The company's board clearly has major decisions to make in the near term, he added.

If a bidding process begins, Apple is the likely acquirer due to the clear strategic fit with its healthcare/fitness/ subscription initiatives, Wedbush said.

At last check, Peloton shares up 18.52% to $35.26.

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