Peloton stock drops as it looks to sell $1 billion loan

Shares of Peloton (PTON) are sliding after the company announced it is starting the sale of a $1 billion loan offering.

Catalysts Hosts Seana Smith and Madison Mills break down the home fitness company's refinancing effort as it attempts to recover from a recent sales slump.

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Melanie Riehl

Video transcript

All right, Peloton chairs are plunging here this morning looking at losses of just about 15% the move lower coming after the company saying that is starting the sale of a billion dollar loan offering the company refinancing debt as it attempts to recover from a recent slump in sales.

Now, this has been an ongoing story here with Peloton just in terms of the depressed sales levels that they have seen at their company doing everything they can to turn around the business.

They also have a new CEO coming in at the helm too.

So lots of questions just about what ultimately the future looks like here for Peloton.

But again, they're launching this global refinancing here for Peloton in an effort to buy back its debt, extend its low maturities trying to get the business and more liquidity move in the right direction.

What exactly the extent of that direction looks like?

I think it's what's up for debate right now.

Yeah, and it sounds like the convertible bond could be available as soon as Tuesday.

That's according to reporting from Bloomberg News, so not confirmed there, but that would obviously be a very quick turnaround it also indicates that JP Morgan Chase is leading that transaction.

So we will have more information tomorrow at 1 p.m. We're going to get a call from JP Morgan that's going to have more information about this.

But Peloton kind of becoming the latest issuer of a lot of debt.

We've seen this as a trend following the rise in interest rates, uh other companies doing this, we've got Citrix parent company Staples Gray Television also kicking off some refinancing efforts and this is what we've also been talking about when it comes to those small and mid cap names that are gonna have to refinance their debt in a higher for longer environment.

That's not going to be good for the amount of debt that they have to pay off and that's why you're seeing the stock plummeting today.

Yes, certainly.

And I think that this is a name.

Just keep on your radar when you talk about what exactly that future looks like here for Peloton under new leadership with Barry mccarthy stepping down the fact that they haven't been able to boost demand for their business at a time when the macro picture has deteriorated just a bit with consumers pulling back on spending, not buying those large larger ticket purchases.

And as a result that has weighed on Pelotons business, they also announced another large lay off on the heels of its most recent earnings results of the company making a number of moves to try to get in a better, more stable financial position here.