Peloton Interactive needs cash rather than succeeds.
Shares of the firm run by Barry McCarthy have fallen more than 84% in the past year, bringing its market capitalization to a paltry $5 billion. Peloton had about $850 million of debt as of the end of its most recent quarter – and about as much cash. But it’s burning through its coffers at a breakneck speed. The current debt deal would only cover half of its operating cash burn over the last nine months.
That suggests its balance sheet could keep ballooning if it needs to continue to raise money, and its equity value would dwindle as it was replaced with debt. It’s the sort of spiral that can quickly topple a company into bankruptcy, leaving creditors in a prime spot to swap their debt for equity, and get into the saddle for real.
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