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2022-02-08 09:23

Peloton Interactive and Co. closed up 20% on Monday, following news that various firms, including Nike and Amazon.com, are interested in buying the company’s stock. Peloton Interactive is a New York-based American fitness equipment and media firm.

Peloton to report quarterly results today

A source informed Reuters on Friday that Amazon is considering a bid for Peloton. The Financial Times also reported that Nike was considering an offer for Peloton. The company managed to set new benchmarks in the previous year as its bikes were bought in mass quantities since the people were confined at home due to the COVID-19 pandemic. However, the news is yet not confirmed as Amazon, Nike, and Peloton did not reply promptly to requests for comment.

In other news, the company is also set to release its financial results Today; however, the rise in stock price is due to the rumoured buyout bids. The prospective proposals come at a time when Peloton's stock is nearing two-year dips, down more than 84% in the last year, as market for its at-home training equipment dropped quicker than predicted after the lockdown was ended and people started moving back to gyms.

The news comes only weeks after an activist investor Blackwells Capital pushed Peloton, one of the largest business beneficiaries of pandemic-related lockdowns, to dismiss its CEO and put the firm up for sale.

Why Peloton might be a good bet for Apple

A Wedbush tech analyst Dan Ives said that Apple (APPL) must not let Peloton (PTON) to be acquired by Amazon. Although Apple is noted for being wary of complex deals (the largest being a $3 billion purchase for headphone firm Beats in 2014),a bid for Peloton stands to reason as it will help Apple’s health and fitness initiatives.

Russ Mould, investment director at UK-based investment platform AJ Bell stated:

"Peloton's founder John Foley, who has attracted the ire of activist investors on governance grounds, might be an obstacle to any deal given the veto power he enjoys under the firm's dual share class structure."

Cowen & Co analyst John Blackledge also stated that Peloton's executives would be resistant to a takeover since the existing CEO and president own more than half of the voting power and are more willing to pursue the company's long-term plan independently. Amazon is known for its vast variety of products that caters to mass market therefore Blackledge believes that Peloton is not a right fit for the e-commerce business as only deal with luxury items.

Once a $50 billion company, Peloton’s market cap has now shrunk to just under $10 billion.