#1U BW BLACKWELLS CAPITAL February 2022 60.74 PELOTON 76.62 "95.14 98.19 A CALL FOR ACTION P 23,59 92168.39.61 PRESENTED BY BLACKWELLS CAPITAL Po 42.96 3135 5373 42.92 28.78 28 8.86 92.14 2.70 9328.78 Peloton Interactive, Inc. (NASDAQ: PTON)#2DISCLAIMER The views expressed in this presentation (the "Presentation") represent the opinions of Blackwells Capital LLC and/or certain of its affiliates ("Blackwells") and the investment funds it manages that hold shares in Peloton Interactive, Inc. (the "Company", "Peloton", or "PTON"). The Presentation is for informational purposes only, and it does not have regard to the specific investment objective, financial situation, suitability or particular need of any specific person who may receive the Presentation, and should not be taken as advice on the merits of any investment decision. The views expressed in the Presentation represent the opinions of Blackwells, and are based on publicly available information and Blackwells' analyses. Certain financial information and data used in the Presentation have been derived or obtained from filings made with the Securities and Exchange Commission ("SEC") by the Company or other companies that Blackwells considers comparable, as well as from third party sources. Blackwells has not sought or obtained consent from any third party to use any statements or information indicated in the Presentation as having been obtained or derived from a third party. Any such statements or information should not be viewed as indicating the support of such third party for the views expressed in the Presentation. Information contained in the Presentation has not been independently verified by Blackwells. Blackwells disclaims any obligation to correct or update the Presentation or to otherwise provide any additional materials. Blackwells recognizes that the Company may possess confidential information that could lead it to disagree with Blackwells' views and/or conclusions. 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This document is the property of Blackwells and may not be published or distributed without the express written consent of Blackwells. All registered or unregistered service marks, trademarks and trade names referred to in the Presentation are the property of their respective owners, and Blackwells' use herein does not imply an affiliation with, or endorsement by, the owners of these service marks, trademarks and trade names. The information herein contains "forward-looking statements." Specific forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and include, without limitation, words such as “may," "will," "expects," "believes," "anticipates," "plans," "estimates," "projects," "targets," "forecasts," "seeks," "could," "should" or the negative of such terms or other variations on such terms or comparable terminology. Similarly, statements that describe our objectives, plans or goals are forward-looking. Forward-looking statements are subject to various risks and uncertainties and assumptions. There can be no assurance that any idea or assumption herein is, or will be proven, correct. If one or more of the risks or uncertainties materialize, or if Blackwells' underlying assumptions prove to be incorrect, the actual results may vary materially from outcomes indicated by these statements. Accordingly, forward-looking statements should not be regarded as a representation by Blackwells that the future plans, estimates or expectations contemplated will ever be achieved. 2#3BW = E IV V VI VII Executive Summary Peloton Is An Attractive Business Peloton's Underperformance Peloton Has Been Grossly Mismanaged TABLE OF CONTENTS Peloton's Board and Governance Lack Accountability and Alignment The Board Should Immediately Put Peloton Up For Sale Conclusion BLACKWELLS CAPITAL 4 10 18 23 43 55 62 3#4BW BLACKWELLS CAPITAL PELOTON INTERACTIVE, INC. Executive Summary#5■ ■ ■ PELOTON @ Peloton is an interactive fitness platform with millions of members, offering connected, technology-enabled fitness. classes that utilize its proprietary hardware The Company's Connected Fitness products include the Peloton Bike, Bike+, Peloton Tread and Tread+ Peloton generates strong recurring revenue from its Members, who pay subscription fees to access Peloton's app or Connected Fitness products EXECUTIVE SUMMARY: OVERVIEW OF PELOTON The Company has been challenged by a series of execution errors; as a result, Q1 2022 revenue was down ~36% from the Company's peak in Q3 2021 LTM Revenue by Source 25% 75% BW BLACKWELLS CAPITAL ■Connected Fitness Revenue Subscription Revenue 2Q 21 Total Revenue ($M) $1,262 $1,065 3Q 21 $937 4Q 21 $805 1Q 21 20% 0% -20% -40% -60% -80% -100% Source: Bloomberg, Company filings. Note: Data as of February 4, 2022 unless specified otherwise. Jan-21 2021 Total Shareholder Returns Apr-21 Eurow Nasdaq Enterprise Value Market Cap LTM Revenue LTM Adj. EBITDA EV/LTM Revenue Employees (as of June 30, 2021) LTM Revenue/Employee Jul-21 much Oct-21 -76% $8,753 Million $8,043 Million $4,069 Million ($99) Million 2.2x 8,976 $453,342 5#6BW EXECUTIVE SUMMARY: A HIGHLY COVETED ASSET Peloton has the hallmarks of an extremely valuable and attractive business, which need to be protected BLACKWELLS CAPITAL PELOTON 156 19253 Large addressable market; early days for market penetration Largest interactive fitness platform Admired brand with top-ranked NPS scores Recurring subscription-based revenue model with high incremental margins ▪ Network effects from ecosystem and stickiness from "star" instructors Highly engaged subscriber base with low churn Multiple growth drivers, including unrealized pricing power Significant intellectual property ■ ■ ■ I ■ ■ 6#7-100% BW EXECUTIVE SUMMARY: PELOTON'S PERFORMANCE HAS BEEN ABYSMAL Peloton's 2021 total shareholder return of -76% was the worst of any company in the Nasdaq 300 Index PELOTON -76% BLACKWELLS CAPITAL -50% Source: FactSet. Calendar year 2021 2021 Total Shareholder Return of Nasdaq 300 Companies 0% 50% 100% 150% 200% 7#8EXECUTIVE SUMMARY: UNDERPERFORMANCE CAN BE TRACED TO SEVERAL FACTORS BW BLACKWELLS CAPITAL Peloton's escalating problems stem from poor decisions and misaligned incentives 1 2 3 4 5 Lack of Management Qualifications Poor Decision Making Lack of Financial Discipline Misalignment of Interests Loss of Credibility 8#9Peloton's Board should compare the risk-adjusted standalone value to a sale ■ ■ ■ EXECUTIVE SUMMARY: THE BOARD MUST EXAMINE A SALE OF THE COMPANY BW A stand-alone Peloton cannot achieve its full potential given: Lack of management capability and credibility A stressed balance sheet and ongoing significant cash burn - It will take years of operational restructuring, organizational re- development and positive results for the company to regain investor confidence and multiple expansion Peloton would be extremely attractive to several technology, streaming, media, metaverse and sportswear companies interested in extending into the rapidly growing health and wellness category BLACKWELLS CAPITAL Potential Acquirors Could Include Types of Acquirers Media and Content Technology and Devices Sporting Goods Online Subscriptions Disney adidas Examples VIACOMCBS COMCAST amazon Google lululemon NIKE NETFLIX Spotify (((Siriusxm))) 9#10BW BLACKWELLS CAPITAL PELOTON INTERACTIVE, INC. Peloton is an Attractive Business#11PELOTON HAS UNIQUE AND APPEALING CHARACTERISTICS High quality, intelligently-designed products that become the centerpiece of a home gym ✓ Subscription model with a wide variety of fresh, immersive fitness classes leading to resilient memberships ✓ Talented "star" instructors, great music, cool technology and an interactive competitive experience (live and on-demand) BW ✓ Top-ranked brand and industry-leading Net Promotor Scores (NPS) enable new product extensions into additional fitness equipment, apparel and accessories Extremely difficult for competitors to replicate the business model, technological innovation and community supporters Retail stores and direct-to-consumer delivery and service capabilities create a powerful advantage over competitors BLACKWELLS CAPITAL à 100 BEST BRANDS by COMPARABLY PELOTON RANKED #1 GLOBAL BRANDS As rated by customers on COMPARABLY PELOTON Cecess 11#12DISRUPTIVE BUSINESS UPENDING TRADITIONAL HEALTH & FITNESS MODELS Peloton's disruptive business model fundamentally improves the fitness experience across two key variables: Convenience and Cost I Convenience Cost BW Unlimited fitness classes anytime, anywhere, on any device Nearly 1,000 new classes per month: cycling, running, strength training, bootcamp, stretching, yoga and meditation Entire household for $39.00 per month compares favorably to $300 per month per person for boutique fitness classes Financing program for bikes and treadmills unlocks demand from cohort of gym goers that would otherwise be unable to afford the offering BLACKWELLS CAPITAL Source: Company website and Company filings. ܀ + or Movies Video Games Music Books Fitness Global Digital Disruption Disrupted ~40,000 local and regional theater operators ~13,000 local and regional dedicated arcades -3,300 independent record stores -38,500 local and national bookstores -36,500 health clubs and boutique fitness operators Disruptor HBO DISNEY NETFLIX amazon Nintendo Microsoft SONY amazon pi amazon PELOTON Spotify 12#13Large Addressable Market Global wellness spending ~ $4.2 trillion of which fitness is ~ $600 billion ■ LARGE ADDRESSABLE MARKET IN EARLY INNINGS OF MARKET PENETRATION ■ Numerous drivers as Peloton transitions from a largely US bike business into a global fitness platform Early Innings of Market Penetration In 2020, there were 74 million people who went to gyms in the United States Planet Fitness alone has ~14 million members Approximately 180 million gym memberships globally in 2018 including approximately 62 million in the U.S. BW BLACKWELLS CAPITAL Increased Penetration of Existing Markets ✓ U.S. Canada ✓ U.K. Germany ✓ Australia New International Markets ✓ Northern Europe ✓ Western Europe Mexico ✓ Asia Source: Global Wellness Institute, Gym membership data per JPMorgan Equity Research, BMO Connected Fitness Primer, Livestrong.com. AUSTRALIA IS ALONG FOR THE RIDE P Expanded Connected Fitness Product Portfolio GERMANY 13#14123 168 BW Highly engaged subscriber base with low churn creates a strong, recurring revenue stream 217 245 HIGHLY ENGAGED SUBSCRIBER BASE WITH LOW CHURN & SAAS BUSINESS UNIT ECONOMICS Connected Fitness Subscribers BLACKWELLS CAPITAL 276 362 457 511 562 712 Total Workouts 886 17,988 17,759 19,171 24,345 Source: Company filings. 1,091 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 2020 2021 2021 2021 2021 1,334 1,667 76,81777,767 44,155 TILI 2,081 98,075 2,331 149,541 2,501 3,231 5,902 6,223 7,069 9,336 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 2020 2021 2021 2021 2021 Q3 Q4 Q1 Q2 Q3 Q4 134,334 Attractive Underlying Unit Economics Ability to drive significant operating leverage as business scales High subscription contribution margin of 60% to 70% Significant content leverage across existing studios (U.S. and U.K.) and instructors ✓ Attractive Lifetime Value Low churn Historically offset cost of customer acquisition with gross profit earned on Connected Fitness Products 14#15■ ■ ■ ■ POWERFUL NETWORK EFFECTS Peloton's instructors provide differentiated experience and have grown significant social media followings "Star" instructors and social media creates competitive moat and network effect Frequency of workouts has increased, reflecting customer satisfaction The platform has a social aspect, so satisfied customers are likely to refer friends BW This virtuous circle that allows company to invest in more content and the social aspects of the platform BLACKWELLS CAPITAL Source: Company filings and Instagram. Instagram follower data as of February 4, 2022. 9.6 8.7 8.9 9.7 7.1 7.4 ¨ ¨ ¨ ¨ ¨ Monthly Workouts Per Subscriber Robin Arzon 946 k Ally Love 826 k 13.9 12.0 11.7 12.6 17.7 24.7 20.7 21.1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 2020 2021 2021 2021 2021 Instructors Instagram Followings 26.0 Wilpers Cody Emma Jess Alex Kendall Matt Rigsby Lovewell King Toussaint Toole 1 m 555 k 412 k 536 k 632 k 218 k 19.9 Erik Hannah Jager Corbin 82.5 k 213 k 15#16■ Peloton is worth substantially more than its current stock price using Revenue multiples Peloton's peers currently trade at an average of 5.6x EV / NTM Revenue Applying a range of EV / Revenue on Peloton's FYE 6/30/23 expected revenue yields an implied price per share of $57.79 - $87.75 Peloton Est. Revenue ($ in million) FYE 6/2023 EV/Revenue Multiple Implied Share Price BW PELOTON STOCK IS UNDERVALUED: EV/REVENUE BLACKWELLS CAPITAL 4x $57.79 $4,986 5x $72.77 6x $87.75 Sources: Company filings. Consensus data from Capital IQ. Company closing stock price trading session as of February 4, 2022, per Bloomberg. Note: Based on net debt of $711 million and 333 million shares outstanding. 2.6x Peers EV / NTM Revenue 3.9x 5.1x 6.1x 10.5× Spotify (Siriusxm») Roku NETFLIX matchgroup 16#17■ ■ Peloton is worth substantially more than its current stock price using Gross Profit multiples Peloton's peers currently trade at an average of 11.5x EV / NTM Gross Profit Applying a range of EV / Gross Profit on Peloton's FYE 6/30/23 expected gross profit yields an implied price per share of $59.36 - $83.96 PELOTON STOCK IS UNDERVALUED: EV/GROSS PROFIT Peloton Est. Gross Profit ($ in millions) FYE 6/2023 EV/Gross Profit Multiple Implied Share Price BW BLACKWELLS CAPITAL 10x $59.36 $2,047 12x $71.66 14x $83.96 6.5x (((Siriusxm))) SATELLITE RADIO Sources: Company filings. Consensus data from Capital IQ. Company closing stock price trading session as of February 4, 2022, per Bloomberg. Note: Based on net debt of $711 million and 333 million shares outstanding. Peers EV / NTM Gross Profit 13.8x 14.0x 13.2x 9.8x |||| Spotify Roku NETFLIX matchgroup 17#18BW BLACKWELLS CAPITAL PELOTON INTERACTIVE, INC. Peloton's Underperformance#19$160.00 $140.00 $120.00 $100.00 $80.00 $60.00 $40.00 $20.00 $0.00 BW Feb-21 www IPO Price $29.00 BLACKWELLS CAPITAL PELOTON'S STOCK HAS PERFORMED POORLY Em May-21 Source: FactSet. Note: Data as of February 4, 2022. Peloton One-Year Stock Price Performance marche Aug-21 Nov-21 -84% 19#20BW "C BLACKWELLS CAPITAL JOHN FOLEY BELIEVES PELOTON IS PERFORMING WELL We think we are playing chess where others are - to be honest, aren't even playing checkers. "" Source: Peloton Interactive Goldman Sachs Communacopia Conference transcript. John Foley September 22, 2021 20#21YET, PELOTON'S RELATIVE SHAREHOLDER RETURNS HAVE BEEN ABYSMAL... Subscription Peers Proxy Peers Russell 1000 Growth Nasdaq S&P 500 P PELOTON -84% -100% Subscription Peers Proxy Peers P Russell 1000 Growth Nasdaq S&P 500 PELOTON 1-Year Total Shareholder Return -100% -75% BW BLACKWELLS CAPITAL -76% -45% -75% -50% -26% 2021 Total Shareholder Return -50% -25% -31% -13% 0% -25% 0% 1% 10% 18% 25% 28% 22% 25% 29% 50% 50% Subscription Peers Proxy Peers Russell 1000 Growth Nasdaq S&P 500 PELOTON -25% Subscription Peers Proxy Peers Russell 1000 Growth Nasdaq S&P 500 PELOTON Total Shareholder Return Since IPO -25% -5% 0% -8% Total Shareholder Return Since March 2020 0% 25% Source: FactSet. Note: Data as of February 4, 2022. Peer data refers to peer median. "Subscription Peers" include Match Group, Netflix, Roku, Sirius XM Holdings and Spotify. 19% 25% 50% 29% 52% 50% 52% 57% 57% 75% 66% 74% 64% 75% 76% 100% 100% 21#22matchgroup Proxy Peers NETFLIX Subscription Peers BW Roku Nasdaq 300 (((Siriusxm))) SATELLITE RADIO Spotify PELOTON EV/2022E Revenue 0.0x 2.0x BLACKWELLS CAPITAL Despite Peloton's low multiple, investors are still actively betting against the stock, and the analyst community appears to doubt management's ability to execute ...AND INVESTORS AND ANALYSTS REMAIN SKEPTICAL 2.3x 2.2x 4.0x 5.8x 5.2x 5.2x 4.9x 7.0x 10.3x 4.0x 6.0x 8.0x 10.0x 12.0x Nasdaq 300 NETFLIX Spotify Roku Subscription Peers Proxy Peers matchgroup PELOTON (((Siriusxm))) SATELLITE RADIO Short Interest 1% 2% 3% 5% 5% 5% 5% 12% 24% 0% 5% 10% 15% 20% 25% 30% % "Sell" or "Hold" Ratings Roku matchgroup Proxy Peers Spotify Subscription Peers Nasdaq 300 (Siriusxm))) SATELLITE RADIO P₁ PELOTON NETFLIX Source: FactSet. Note: Data as of February 4, 2022. Peer data refers to peer median. "Subscription Peers" include Match Group, Netflix, Roku, Sirius XM Holdings and Spotify. 0% 10% 23% 25% 27% 20% 30% 37% 37% 37% 47% 48% 49% 40% 50% 60% 22#23BW PELOTON INTERACTIVE, INC. Peloton Has Been Grossly Mismanaged BLACKWELLS CAPITAL#241 2 3 4 LO 5 PELOTON'S UNDERPERFORMANCE IS DUE TO MISMANAGEMENT Peloton's escalating problems stem from poor decisions and misaligned incentives Lack of Qualification: Poor Decision Making: Lack of Financial Discipline: Misalignment of Interests: Loss of Credibility: BW BLACKWELLS CAPITAL CEO John Foley is right to be insecure about his capabilities and qualifications Mr. Foley has made a series of poor decisions relating to product, pricing, demand, safety and capital allocation. Under Mr. Foley's management, the Company suffers from a lack of financial discipline and ineffective internal controls Mr. Foley's interests and incentives are misaligned with employees and shareholders Mr. Foley has lost credibility with discontent employees, shareholders and analysts 24#251 BW LACK OF QUALIFICATION: FOLEY ON FOLEY BLACKWELLS CAPITAL 66 1. 2. 3. I think I'm not a very good manager "6 Is there anything about being CEO that you don't like, that you like to delegate? John Foley's Response "" Finance. Our CFO does 99% of finance. I engage because I want to know how we're doing. But to say I don't add value to her operation is an understatement. You can also say the same with technology. Our CTO doesn't get any help from me. I'll go sometimes months without talking to our CTO, which as a CEO of a technology company, that's kind of rare. 2 I interview almost nobody ² TIME Interview with John Foley, Peloton CEO³ 1 "J¹ How would your colleagues, your co-founders, describe your strengths as a manager? ABC News interview, May 5, 2016: https://abcnews.go.com/Business/peloton-fitness-apple-technology/story?id=38886911. LinkedIn interview, March 13, 2019: https://www.linkedin.com/pulse/one-believed-pelotons-ceo-he-built-company-heres-how-john-daniel-roth/ Time Magazine interview, May 26, 2020: https://time.com/5839552/peloton-ceo-john-foley/ John Foley's Response "6 I'm not sure they'd say I have many strengths at all. 25#261 $180.00 $160.00 $140.00 $120.00 $100.00 $80.00 $60.00 $40.00 $20.00 $0.00 BW mer "[W]e remain very, very bullish on our opportunity. We haven't seen any softening of demand."1 Jan-21 BLACKWELLS CAPITAL LACK OF QUALIFICATION: MR. FOLEY MANAGES WITH UNBRIDLED OPTIMISM RATHER THAN DISCIPLINE 1. 2. ■ ■ ■ ■ "[W]e've never been more excited about our future road map."2 Peloton's Share Price in 2021 Apr-21 Peloton Interactive Q2 2021 Earnings Call transcript. Peloton Interactive Q3 2021 Earnings Call transcript. ww Quarter over quarter revenue declined 14% during the most recent quarter Quarter over quarter user growth declined from 23% to 5% during CY 2021 Monthly workouts per active user have declined from 26.0 to 16.6 during the same period Meanwhile, inventory has more than doubled to $1.3 billion Jul-21 "[O]ur domestic business is just growing so fast, and it's still such a beautiful growth story..." 3. 4. mur Oct-21 Peloton Interactive Goldman Sachs Communacopia Conference transcript. Peloton Interactive Q1 2022 Earnings Call transcript. "[W]e have never been more excited about our future than we are today." "4 - 76% 26#272 BW POOR DECISION MAKING: INCONSISTENT GO-TO-MARKET STRATEGY BLACKWELLS CAPITAL "What's the optimal price point, $1000?"1 "I don't know." - John Foley Management does not have a well-informed pricing strategy and continues to vacillate on pricing strategy, confusing the market and harming shareholders CNBC Peloton is slashing the price of its Bike by hundreds of dollars to $1,495 PUBLISHED THU, AUG 26 2021-4:04 PM EDTI UPDATED THU, AUG 26 2021-8:27 PM EDT Lauren Thomas PLAURENTHOMAS August 26, 2021 KEY POINTS SHARE fin ✔ • Peloton said it's cutting the price of its less expensive Bike product by about 20% to $1,495, starting Thursday. • The price drop will also take effect in the U.K., Canada, Germany and Australia. • When the company debuted its Bike+ machine last September at $2,495, it cut the original Peloton Bike's price from $2,245 to $1,895. January 18, 2022 THE WALL STREET JOURNAL. BUSINESS Peloton Bikes, Treadmills Are About to Cost You More By Camille Furst Follow Updated Jan. 18, 2022 4:36 pm ET The prices people pay for some Peloton Interactive Inc. PTON 2.52 %▲ products are about to increase. The at-home fitness company, hurt by slowing demand, is set to start charging customers hundreds of dollars in delivery and setup fees for its basic stationary bike and treadmill products, according to a banner notice on its website. 1. Interview question to Mr. Foley regarding pricing: "Peloton CEO John Foley Talks Cheaper Bikes and Making the Most of Staying Home", Time Magazine, May 26, 2020. 27#282 I I ■ POOR DECISION MAKING: INABILITY TO FORECAST DEMAND 66 1 The actual hardware sales are incredibly predictable. It's a beautiful business. ¹ Foley insisted demand would only ever increase Foley massively increased production capacity in 2020, building inventory In February 2021, Foley boasted: "We've increased the [manufacturing] capacity by 6x, which is pretty herculean, but we're definitely not going to stop there. We bought Precor. We're going to be investing in U.S. manufacturing."4 But then demand slowed. Foley noted (at the same February conference): "We're now making more bikes and treads than we're selling"4 "One employee said warehouses resembled 'jigsaw puzzles' with employees trying to figure out where to stuff another bike."2 Peloton has now been forced to moth-ball production² BW BLACKWELLS CAPITAL 1. Source: John Foley on CNBC. November 5, 2019. https://www.youtube.com/watch?v=jZO-IBmp390 Source: https://www.businessinsider.com/leaked-slides-show-peloton-planning-production-pause-2022-1. 2. 3. 4. "How [do] you envision managing, meeting the incredible demand that you're seeing now versus the risk of overbuilding [supply]..." John Foley's Response "[T]hat's a term that's never come up in the Peloton senior leadership rooms or boardrooms...We see that we're going to be able to market into a massive opportunity that we're going to need supply chain capacity for years and years."³ Mr. Foley responding to a question from a Goldman Sachs analyst on Q4 2020 Earnings Call. Mr. Foley at Goldman Sachs Investor Conference, February 11, 2021. 28#292 POOR DECISION MAKING: DISASTROUS BUNGLING OF TREADMILL SAFETY ISSUES BW The New York Times Child Dies in Accident Involving Peloton Treadmill¹ April 17 CPSC Issues Statement Warning Consumers About Peloton's Tread+ "The U.S. CPSC is warning consumers about the danger of popular Peloton Tread+ exercise machine after multiple incidents of small children and a pet being injured beneath the machines. "² BLACKWELLS CAPITAL April 17 Peloton Irresponsibly and Reflexively Denies the Issue "The company is troubled by the Consumer Product Safety Commission's (CPSC) unilateral press release about the Peloton Tread+ because it is inaccurate and misleading. There is no reason to stop using the Tread+..."3 May 5 Peloton Belatedly Acknowledges Issues and Apologizes 1. Source: https://www.nytimes.com/2021/03/18/business/peloton-tread-death.html. 2. Source: "CPSC Warns Consumers: Stop Using the Peloton Tread+": https://www.cpsc.gov/Newsroom/News- Releases/2021/CPSC-Warns-Consumers-Stop-Using-the-Peloton-Tread. Statement from John Foley "Peloton made a mistake in our initial response to the Consumer Product Safety Commission's request that we recall the Tread+. We should have engaged more productively with them from the outset." Foley's lack of leadership has jeopardized health and safety 3. Source: Peloton press release issued April 17, 2021. 4. Source: https://www.onepeloton.com/press/articles/tread-and-tread-recall. "14 29#302 ■ I BW POOR DECISION MAKING: POOR CAPITAL ALLOCATION Foley invested $800 million in acquisitions and capex with pride as his lodestar Foley bought troubled Precor for $431 million believing he could fix it and expand Peloton's reach into different types of commercial customers: "Precor's product portfolio and sales team will also accelerate our commercial business, where we see a significant opportunity to grow Precor's franchise while introducing the Peloton platform..."1 x Months later, he was forced to admit it was a mistake: "[W]e have reduced expectations for our commercial channel or legacy Precor business, given both supply and demand dynamics."2 Then, Foley invested another $400 million to develop 1 million square feet of production capacity X Seven months later, Foley delayed the progress, admitting the capacity was not needed. BLACKWELLS CAPITAL MARKETS INSIDER "The slowdown in demand for Peloton makes its past decisions particularly challenging. The company acquired exercise equipment manufacturer Precor for $420 million in 2020 and announced it would build a US manufacturing facility for about $400 million. But Peloton may not need that extra capacity if demand doesn't recover to the levels it saw during the pandemic."³ 1. Source: Peloton Interactive Q2 2021 Earnings Call transcript. 2. Source: Peloton Interactive Q1 2022 Earnings Call transcript. 3. Source: https://markets.businessinsider.com/news/stocks/peloton-stock-falls-below-ipo-price-production-halt-demand-drop-2022-1. 30#312 POOR DECISION MAKING: UNNECESSARY & EXPENSIVE OFFICE SPACE IN NYC Peloton signed a 15-year lease that totals more than $450 million to be paid over the period . At the end of 2018, Peloton signed a 15-year lease for 300,000 square feet in Manhattan BW PELOTON RETAIL AT HC BLACKWELLS CAPITAL RESTAURANT & RETAIL AT THE BASE OF A 700K SF OFFICE TOWER WINicK II COVE Source: Company filings. 212.792.200 STEVEN E. BAKER, DENT DANIYEL COHEN ▪ The move represented a +6x increase of space from the company's prior location in Manhattan PELOTON APROPAPARD PELOTON 31