According to a source familiar with the situation, Peloton Interactive Inc has attracted interest from potential purchasers, including e-commerce behemoth Amazon.com Inc, as the exercise bike company struggles to maintain pandemic-fueled expansion. Peloton’s stock soared 30% in extended trading following the announcement, which came days after activist investor Blackwells Capital asked the company’s board to sell it.
According to a source, Amazon is considering an offer for Peloton and is consulting with experts on whether and how to proceed. According to the source, Peloton has not yet chosen whether or not to pursue a sale. Meanwhile, the Financial Times reported late Friday that Nike Inc, a sportswear business, is considering an offer for Peloton, citing people familiar with the situation who said the discussions are preliminary and Nike has not spoken to Peloton. Peloton and Nike did not respond to a request for comment from Reuters, and Amazon declined to comment.
During the COVID-19 lockdowns, Peloton’s sales soared, with many people purchasing home workout equipment. However, as vaccination rates rose, gyms reopened, and competitors provided more competitive products, the company’s fortunes began to decline. Its market value has plummeted to approximately $8 billion from a peak of over $52 billion in early 2021, after it signalled in November that demand for its exercise bikes and treadmills was slowing quicker than planned.
Peloton’s market value might hit $10 billion if the stock’s advances continue on Monday.
Last week, Blackwells Financing demanded that Peloton’s board of directors dismiss CEO John Foley immediately, accusing him of making transactions with high fixed costs and retaining enormous inventory while misleading investors about the company’s need for capital. Foley was chastised by Blackwells for, among other things, recruiting his wife as a top employee and signing a 300,000-square-foot, 20-year lease for office space in New York.
According to Reuters, the investment group led by Jason Aintabi has also pushed the board to sell the company to a bidder such as Walt Disney Co, Apple Inc, Sony Group, or Nike Inc. Peloton has sought to mitigate the impact to its growth by lowering the price of its popular bike and increasing marketing advertising, but the company’s growth has remained flat.
Following reports that it was temporarily pausing production of linked fitness bikes and treadmills due to a major reduction in demand, Peloton announced last month that it was examining the size of its employees and “resetting” production levels.
While many investors have become upset with Peloton due to a sharp drop in its stock price, experts also note that the company’s two classes of shares, which essentially allow insiders to control it, may make it a challenging acquisition target. The Wall Street Journal was the first to report the news.
The growing popularity of fitness bands has prompted tech titans like Apple Inc. and Samsung to include health-tracking features such as an electrocardiogram and a blood pressure sensor. In January, Google, which is owned by Alphabet Inc, completed its acquisition of Fitbit Inc, a fitness tracking business.
Following blockbuster reports this week, tech behemoths like Amazon and Alphabet have seen their stock prices surge. Amazon achieved the greatest ever one-day increase in worth a day after Facebook owner Meta Platforms experienced the largest ever one-day loss of stock market value for a US firm.