An activist investor is urging Peloton's board of directors to fire its CEO and put the connected fitness company up for sale.

Blackwells Capital, which has a stake of less than 5% in Peloton, offered in an open letter a list of CEO John Foley's "repeated failures," including wavering in pricing strategy, changing the product road map and not initially working with the Consumer Product Safety Commission when it issued a safety warning about the company's treadmills. 

The letter also argued Peloton should consider a sale, listing companies like Apple, Disney, Sony and Nike as possible buyers interested in expanding their presence in the at-home health and fitness sector. 

The news comes days after Foley released a letter saying Peloton was "right-sizing" its production and may need to consider layoffs. The company did not respond to a request for comment.

"We believe the pandemic offered Peloton a tremendous and unexpected opportunity to accelerate consumer adoption of its category-defining products and drive performance of the business and value for shareholders. With the stock now trading below the IPO price, and down more than 80% from its high, it is clear that the Company, the executives and the Board have squandered this opportunity," Blackwells' chief investment officer Jason Aintabi wrote. 

WHY IT MATTERS

Last week, CNBC reported Peloton was temporarily halting production of its bike and treadmill products, citing a decrease in demand. 

Following the article, Foley released a public letter to his team saying the information in the article was taken out of context and that "rumors" the company was halting all production was false. However, the letter also said Peloton was "right-sizing" and "resetting our production levels for sustainable growth."

Foley also wrote that the company needed to "evaluate our organization structure and size of our team, with the utmost care and compassion." 

THE LARGER TREND

Peloton hit the public markets in 2019, raising $1.16 billion, with shares priced at $29 apiece. The company saw plenty of growth during the COVID-19 pandemic as consumers were stuck indoors, but share prices are now hovering around $27.

The company also hit a rough spot when the Consumer Product Safety Commission issued a warning about the company's Tread+ after multiple reports of child injuries and one death. Peloton initially called the report "inaccurate and misleading," but eventually recalled its connected treadmills, rolled out a software update and released a new line with improved safety features.