Amazon or Nike? Peloton surges on reports of buyout interest

The exercise bike maker recently lost a chunk of the share gains it made during the coronavirus pandemic.

A person walks past a sign in front of a Peloton store in the Manhattan borough of New York City, US
Peloton's shares were set for their best day since the company's stock-market debut in September 2019 [File: Carlo Allegri/Reuters]

Shares of Peloton Interactive Inc rose 22 percent on Monday after reports of takeover interest from Inc and Nike Inc in the exercise bike maker that recently lost a majority of the share gains it made during the coronavirus pandemic.

Peloton’s shares were set for their best day since their debut in September 2019. They earlier rose as much as 31 percent in the session.

Amazon is exploring an offer for Peloton, a source told Reuters news agency on Friday, while Nike too, reportedly, is weighing a bid for the company, which touched new records last year as its bikes sold like hotcakes during the pandemic when people were stuck at home., Nike and Peloton did not immediately respond to a request for comment.

Bearish bets on Peloton’s shares have increased recently with estimated short interest as a percentage of free float nearly doubling over the past two months to 14.1 percent, according to data from analytics firm Ortex.

“Even though short sellers in PTON have losses of about $250m since Friday’s close, they are still in significant profit,” said Ortex’s co-founder, Peter Hillerberg. Peloton’s shares were down more than 84 percent in the past year.

Last month, activist investor Blackwells Capital urged Peloton to fire its chief executive officer and put the company up for sale.

“Peloton’s founder John Foley, who has attracted the ire of activist investors on governance grounds, might be an obstacle to any deal given the veto power he enjoys under the firm’s dual share class structure,” said Russ Mould, investment director at United Kingdom-based investment platform AJ Bell.

Meanwhile, Cowen and Co analyst John Blackledge believes Peloton would not be an ideal fit for Amazon as the e-commerce giant typically sells mass-market products and services, whereas Peloton’s products are positioned as premium.

Peloton is slated to report second-quarter results Tuesday after the market close.

Source: Reuters