Peloton Interactive Inc (PTON.O) has drawn interest from potential buyers including e-commerce giant Amazon.com Inc, according to a person familiar with the matter. As the exercise bike maker struggles to maintain pandemic-fueled growth.
Peloton’s market cap of roughly $8 billion has fallen from a high of nearly $50 billion about a year ago. Investors poured into the stock after the onset of the Covid pandemic, sending shares up more than 440% in 2020. But they’ve started to flee as many realize that future growth will come at a much higher cost. Shares closed Friday at $24.60, well below its IPO price of $29.
Amazon is exploring an offer for Peloton. They speaking with advisers about whether and how to proceed, a source said. Peloton has not yet decided whether it will explore a sale, according to the source.
According to the Wall Street Journal report, Amazon has been speaking to advisers about a potential deal. However, there was no guarantee the e-commerce giant will follow through with an offer or that Peloton would be receptive, it added.
Peloton could be an appealing opportunity for Amazon to expand its health and wellness presence. In 2020, the online retailer made its first major play in the wellness hardware market by launching its Halo band, which tracks users’ exercise and sleep.
Acquiring Peloton could be financially in reach for Amazon, which reported stellar quarterly profits of $14.32bn on Thursday. Amazon’s biggest acquisition to date was grocery chain Whole Foods, which it snapped up for $13.7bn in 2017.
Peloton and Nike did not immediately respond to a Reuters request for comment, while Amazon declined to comment.
Sales Impact
Peloton’s sales boomed during COVID-19 lockdowns, with many snapping up home fitness equipment. But its fortunes began to fade as vaccinations increased, gyms reopened and rivals offered competitive products.
Peloton is set to report fiscal second-quarter results on Tuesday, after the market close, and all eyes will be on its full-year outlook. Peloton last week preannounced a handful of second-quarter metrics, including revenue. Which is expected to be within its expected range, and connected subscribers, which came up short of its own estimates.
Stock Movement
Shares of Peloton surged more than 30% in extended trading Friday after The Wall Street Journal reported e-commerce giant Amazon has approached the company about a potential deal. Other potential suitors are circling, the Journal said, but no deal is imminent and there may not be one at all.
