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Amazon is exploring offer for Peloton, source says; report says Nike also weighing bid

Stock MarketsFeb 05, 2022 02:35AM ET
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© Reuters. FILE PHOTO: A Peloton exercise bike is seen after the ringing of the opening bell for the company's IPO at the Nasdaq Market site in New York City, New York, U.S., September 26, 2019. REUTERS/Shannon Stapleton

(Reuters) -Peloton Interactive Inc has drawn interest from potential buyers including e-commerce giant Amazon.com Inc (NASDAQ:AMZN), according to a person familiar with the matter, as the exercise bike maker struggles to maintain pandemic-fueled growth.

Shares of Peloton (NASDAQ:PTON) surged 30% in extended trading on the news, which comes days after activist investor Blackwells Capital urged the company's board to put it up for sale.

Amazon is exploring an offer for Peloton and is 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.

Meanwhile, the Financial Times reported https://www.ft.com/content/8ae3240b-8c09-48e4-bc2c-b7a9e4c00c51 late on Friday that sportswear company Nike Inc (NYSE:NKE) is also evaluating a bid for Peloton, citing people briefed on the matter, who said the considerations are preliminary and Nike has not held talks with Peloton.

Peloton and Nike did not immediately respond to a Reuters request for comment, while Amazon declined to comment.

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.

In November, it hinted that demand for its exercise bikes and treadmills was slowing faster than expected, and its market capitalization since then has shrunk to about $8 billion from a peak of nearly $52 billion in early 2021.

If the stock's gains hold on Monday, Peloton could reach the $10 billion market-capitalization threshold.

Last week, Blackwells Capital called on the board of Peloton to remove CEO John Foley immediately, accusing him of deals that set high fixed costs and for holding on to excessive inventory, while misleading investors about the need to raise capital.

Blackwells criticized Foley for hiring his wife as a key executive and committing to a 300,000-square-foot, 20-year lease for office space in New York, among other things.

The investment firm, run by Jason Aintabi, has also urged the board to put the company up for sale to a buyer like Walt Disney (NYSE:DIS) Co, Apple Inc (NASDAQ:AAPL), Sony (NYSE:SONY) Group or Nike Inc, Reuters reported on Sunday.

Peloton has tried to cushion the blow to its growth by cutting the price of its popular bike and ramping up its ad spending, but growth remains stagnant.

Last month, Peloton said the company was reviewing the size of its workforce and "resetting" production levels, following a report that it was temporarily halting production of connected fitness bikes and treadmills after a significant drop in demand.

While many investors have become frustrated with Peloton due to a steep drop in its share price, analysts also note that the company may be a difficult acquisition target because of its two classes of stock, effectively allowing insiders to control it.

The news was first reported by the Wall Street Journal. (https://on.wsj.com/3AVMIf7)

The growth in the fitness band market has prompted tech giants such as Apple Inc and Samsung (KS:005930) to introduce features for health tracking, including electrocardiogram and blood pressure sensor. Alphabet (NASDAQ:GOOGL) Inc-owned Google closed its acquisition of fitness tracking company Fitbit (NYSE:FIT) Inc in January.

Tech giants including Amazon and Alphabet have also seen a rise in their valuation after blockbuster results this week. A day after Facebook (NASDAQ:FB) owner Meta Platforms suffered the deepest loss of stock market value in history for a U.S. company, Amazon logged the greatest ever one-day increase in value.

Amazon is exploring offer for Peloton, source says; report says Nike also weighing bid
 

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Comments (8)
Jay Os
Jay Os Feb 06, 2022 5:57AM ET
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Reuters id same disinformation like CNN who lose 80% customers
Jay Os
Jay Os Feb 06, 2022 5:54AM ET
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Potential buyers are not customers it is the bubble, potential buyers are all around the world, but someone is stupid if they invest on base on this.
Jay Os
Jay Os Feb 05, 2022 2:18PM ET
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Fake income from anothers companies, wow. Amazon is better with most expensive cloud on world? No, he offers ********computer which are use to spy people and power is not use for your requirements
hans gaaikema
hans gaaikema Feb 05, 2022 4:49AM ET
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I have not done the math, but I would guess that yesterdays surge in amazon market value makes no sense compared with with the exepected synergies
Dave Jones
Dave Jones Feb 05, 2022 2:53AM ET
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peloton will never make money.
Vlas Dacian
Vlas Dacian Feb 05, 2022 2:45AM ET
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This is 1 bn company maximum … fake news
Sabi Sab
SabiSab Feb 04, 2022 7:30PM ET
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Seriously, how many of those fitness bikes does a household need to buy?  Those who wanted to own one had bought during Covid lockdown already.  If Amazon is really making an offer to PTON, I do think it's a terrible decision.
Scott Williams
Scott Williams Feb 04, 2022 7:30PM ET
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Amazon will buy the name. people expect PTON to be a good product. Amazon will start manufacturing them cheaply.
Carlos Kwetey
Carlos Kwetey Feb 04, 2022 6:33PM ET
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(finance) The capital raised by a company through the issue of shares. The total of shares held by an individual shareholder.
 
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