Peloton soars as Amazon, Nike reportedly weighing for bid, Apple floated as potential buyer

• Peloton is reportedly working with an adviser

• Wedbush expects the acquisition would go off in the range of $12 billion to $15 billion

Fitness bike maker Peloton Interactive Inc (NASDAQ: PTON) soared almost 31% on Monday after reports of takeover interest from Amazon.com Inc (NASDAQ: AMZN) and Nike Inc (NYSE: NKE), and analysts expect that Apple Inc (NASDAQ: AAPL) would also join the bidding war.

While Peloton has not yet decided whether it will explore a sale, last Friday, Financial Times reported that Nike is evaluating a bid for Peloton, following Reuters’ report that Amazon is also exploring an offer and is speaking with advisers.

However, neither Nike nor Amazon has have held direct talks with Peloton yet.

Analysts from Los Angeles-based investment firm Wedbush Securities on Monday said they also expect that Apple should also join the bidding and said they “would be shocked” if the iPhone maker is not “aggressively involved.”

However, Bloomberg on Monday reported that Peloton is working with an adviser, citing a source, who also told the news organization that the takeover interest is exploratory but may not lead to a transaction.

What went wrong with Peloton

Shares of the New York-based fitness and lifestyle company had fallen almost 86% from the all-time high it hit a year ago as the gradual easing of pandemic restrictions fueled concerns among the investors that the growth would slow down.

Peloton’s valuation, which was deemed to be too expensive until early 2021, peaking to nearly $52 billion, has come down sharply in the recent rout.

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As of Friday’s close of $24.60 a share, the market cap of the company was recorded at around $8.1 billion.

That’s below its September 2019 IPO price of $29 a share.

Last month, activist investor Blackwells Capital, which owns about a 5% stake in the company, pushed for the removal of Peloton’s CEO, John Foley and asked the board to begin the sale process to maximize the value of Peloton’s brand, team, customer base, and technology as it would be an attractive acquisition target for more prominent technology or fitness-oriented companies.

Wedbush pushing Apple for takeover

Wedbush analyst Dan Ives said he believes it could be a “business model risk” for Apple if another company would acquire Peloton.

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“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 healthcare initiatives which have been a key strategic linchpin for Cook,” Ives said.

Wedbush estimated Peloton’s acquisition would go off in the range of $12 billion to $15 billion, depending on the timing and competitive process.

The firm also noted that it is not a big reach for Apple, which has around $200 billion in cash and has a solid free cash flow anticipated for 2022.

Picture Credit: TechCrunch