Peloton recovers after sinking on company's plan to sell $1 billion in stock

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Peloton recovers after sinking on company's plan to sell $1 billion in stock
Peloton bike.Michael Loccisano/Getty Images
  • Peloton shares on Tuesday recovered ground lost when the company said it would sell $1 billion in common stock.
  • Peloton followed up with the pricing of 23.9 million shares at $46 apiece, below Monday's closing level.

Peloton stock bounced higher Tuesday, reversing earlier losses that emerged after the high-end exercise equipment maker said it had planned to sell $1 billion in shares.

The company followed up with terms about the sale after an early Tuesday statement on the sale of Class A common shares. The underwritten public offering of 23.9 million shares priced at $46 each, rendering the sale set to close on Thursday worth about $1.1 billion.

The shares priced below Monday's close at $47.49 but the stock managed to swing higher during Tuesday's session, surging 8.7% to $53.63. Volume was heavy, with more than 26 million shares outstripping average daily volume of 10 million shares.

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In the premarket session, the shares slumped by as much as 7.1%. That move had set up the shares to extend this year's drop of 69%.

Peloton, which sells bikes, treadmills, and interactive classes, granted the stock offering's underwriters a 30-day option to purchase up to an additional 3.26 million Class A shares at the public offering price.

Proceeds from the sale will be used for general corporate purposes, which may include building or expanding facilities or investing in technology, it said. Investors in the stock offering included entities affiliated with Durable Capital Partners LP and TCV as well as funds and accounts advised by T. Rowe Price. TCV's co-founder and general partner Jay Hoag sits on Peloton's board of directors.

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The offering comes less than two weeks after shares suffered their biggest one-day drop ever on weak first-quarter results and lowered forecasts for fiscal 2022 as people emerge from pandemic-induced lockdown mode.

News of the stock sale also arrived after the company said during its conference call about first-quarter results that it wasn't aiming to fundraise.

"[We] don't see the need for any additional capital raise based on our current outlook," said Jill Woodworth, Peloton's CFO, during the call on November 4. "As we mentioned, we're taking significant steps to adjust our expenses across COGS and opex with this revised revenue guidance, then we have a lot of levers to pull." COGS refers to costs of goods sold and opex refers to operating expenses.

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