Amazon and Nike are contemplating takeovers of the exercise brand Peloton, according to recent reports.
Peloton enjoyed soaring sales of its exercise bikes and treadmills during the pandemic as global lockdown measures forced people to work out at home. But in the past year, as lockdowns have eased, Peloton shares have plummeted, sending the company’ valuation spiralling to less than a fifth of its $50 billion peak.
In August 2021, Peloton cut the price of its most popular product, the exercise bike, by 20%, amid widening losses and slowing revenue growth. In November that year, the company warned investors it expected revenue to slow in 2022.
“The primary drivers of our reduced forecast are a more pronounced tapering of demand related to the ongoing opening of the economy, and a richer than anticipated mix of sales to our original bike,” it said in a recent letter to shareholders.
In January 2022 investment firm Blackwells Capital called for Pelton CEO John Foloey to be fired, and for the company to be put up for sale.
Now it seems potential buyers are circling. The Wall Street Journal first reported the rumor that Amazon was considering making an offer for Peloton. Shares in the fitness company immediately surged more than 30% in after-hours trading following the report. Amazon has declined to comment on the rumors.
Since then, the Financial Times has reported retail giant Nike is also looking at a potential deal. Wedbush Securities analysts believe other potential bidders will soon emerge. “Apple may be forced into this deal if Amazon, Nike, or potentially Disney aggressively goes after Peloton in a defensive blocking strategic move,” Dan Ives of Wedbush Securities wrote in a note. “On the offensive front, Apple through its Fitness+ subscription service and Apple Watch strategy would be able to leverage the Peloton services and flywheel to significantly bulk up its health-care initiatives, which have been a key strategic linchpin.”
Peloton is currently valued at around $8 billion, based on its share price at market close on Friday of $24.60, which is below its initial public offering price of $29 set in September 2019. Analysts have warned the deal could well face regulatory scrutiny should another tech giant attempt an acquisition.