Did Peloton Make an $820 Million Mistake?
Connected-fitness leader Peloton Interactive (NASDAQ: PTON) was facing a demand surge and supply constraints during the depths of the pandemic over a year ago. While increased consumer interest is a problem any business would love to have, for Peloton it led to disgruntled customers and lost sales.
The company's solution was twofold. Management decided to buy Precor, a commercial fitness equipment provider, for $420 million in a deal that closed in April 2021. And in the following month, Peloton announced plans to build a $400 million facility in Ohio, set to open in 2023. Both of these moves were meant to expand manufacturing.
However, based on the current situation, characterized by weakening demand for Peloton amid heightened competition and gym reopenings, these two investments now appear to have been huge mistakes. Let's take a closer look.
Source Fool.com
