Would a Peloton acquisition make sense for Amazon or Nike?
Amazon and Nike are reportedly exploring separate bids for Peloton, the beleaguered leader in internet-connected bikes and treadmills.
Peloton’s stock became an overnight darling of Wall Street after the pandemic shuttered gyms and led to explosive demand for the company’s at-home bikes and treadmills and instructor-led on-demand workout classes.
In November, Peloton indicated demand for its exercise bikes and treadmills was slowing faster than expected as gyms reopened. On January 20, Peloton issued preliminary quarterly results that showed subscribers came in below expectations while announcing significant cost-cutting measures. At the end of this month, the company will start to tack on shipping and setup fees for its bike and treadmills, in part due to inflation.
Peloton’s market capitalization has shrunk to about $8 billion from a peak of nearly $52 billion in early 2021.
In late January, activist investor Blackwells Capital issued a letter demanding the company fire co-founder and CEO John Foley and explore a sale. Blackwells’ letter speculated that Apple, Walt Disney and Nike could be potential buyers.
On Friday, Peloton’s shares were trading up around 30 percent in after-hours trading after the Wall Street Journal first reported Amazon’s interest, followed by news of Nike’s interest from the Financial Times. The WSJ reported that other potential suitors are showing interest, though no deal is said to be imminent.
For Amazon, a Peloton purchase could accelerate its broad ambitions in healthcare and wellness by tapping insights from Peloton’s 2.8 million subscribers. In 2020, Amazon introduced its wearable Halo products to compete with Google-owned Fitbit and other fitness devices. The WSJ also speculated that Amazon could help ease Peloton’s logistics challenges and that the company’s subscriptions could be bundled with Prime.
Nike exited its Fuelband wearable-hardware efforts in 2014, but a Peloton acquisition may fit with the brand’s data-led digital transformation being guided by John Donahoe, CEO, since the start of 2020. Said Mr. Donahoe on a December quarterly call, “We are in an era where that is the liquid gold for any brand is to have a direct connection with the consumer.”
- Amazon, Other Potential Suitors Explore Peloton Deal – The Wall Street Journal
- Amazon and Nike evaluate separate bids to buy Peloton – Financial Times
- Peloton Draws Takeover Interest From Amazon and Nike – Bloomberg
- Peloton Interactive, Inc. Reports Preliminary Second Quarter Fiscal 2022 Results – Peloton
- Nike, Inc (NKE) Q2 2022 Earnings Call Transcript – The Motley Fool
DISCUSSION QUESTIONS: Would a Peloton purchase make more sense for Amazon, Nike or neither? Where do you see the most value in Peloton for a potential owner: its subscribers, data or hardware?