Investors have piled in to posh exercise bikes firm Peloton after speculation emerged that the company is being eyed by a number of potential buyers, including Amazon and Nike.
Shares in Peloton were barely changed on Friday, nudging up from $24.25 to close at $24.60, yet trading exploded after-hours. Pre-market trading points to the stock jumping more than 23% when Wall Street opens for business later today, implying an opening share price of $30.31.
That implies a rough $9.9 billion market cap for the lockdown winner, just a fraction of its December 2020 peak valuation that ballooned to more than $53 billion.
The Wall Street Journal reported on Friday that online retail platform Amazon was looking at Peloton as the exercise bikes and treadmills maker struggles to maintain pandemic-fuelled growth. The Financial Times has since said that sportswear giant Nike is also running the rule over Peloton.
ACTIVIST CALLS FOR SALE
News that potential buyers are circling Peloton comes days after activist investor Blackwells Capital urged the company’s board to put it up for sale and immediately remove founder and chief executive John Foley. Blackwells, which owns less than 5% of Peloton shares, accused Foley of deals that set high fixed costs and holding on to excessive inventory, while misleading investors about the need to raise capital.
Peloton's sales boomed during Covid-19 lockdowns, with many people snapping up home fitness equipment. But its fortunes began to fade as vaccinations increased, gyms re-opened and rivals offered competitive products.
BRAKES ON GROWTH
Figures for the first quarter of fiscal 2022, announced on 4 November 2021, showed just 6% year-on-year revenue growth at $805 million, the first quarter-on-quarter growth reverse since Q3 2019.
The company raised $1 billion from investors in November 2021 to help ramp-up ad spend and it has also slashed the price of its fitness equipment in recent months. Bikes are now available for £1,550 in the UK, about 25% lower than previous prices, yet growth continues to stagnate.
Disney, Apple and Sony have also been mooted as possible buyers of Peloton, but any deal will be complicated by its dual-class share structure which gives 20-times the voting power to founders and top company executives.
