Peloton shares soared more than 30 percent in after-hours trading on Friday after reports that Amazon and others were interested in a potential deal with the embattled fitness company.
After closing at $24.60 on Friday, the company’s shares rose to a high of $34.09 in trading after hours.
The impulse came after the Wall Street Journal reported that Amazon is exploring a bid for Peloton and is talking to advisers about whether and how to proceed.
Peloton has not yet decided whether to explore a sale, according to the source.
Meanwhile, the Financial Times reported late on Friday that Nike is also evaluating a bid for Peloton, citing people briefed on the matter, who said the considerations are preliminary and that Nike has not held talks with Peloton.
After closing at $24.60 on Friday, shares of the company rose to a high of $34.09 in after-hours trading on news that Amazon is kicking the tires of the troubled exercise bike maker.
Peloton shares have been downhill since hitting a 52-week high of 157.83 last year.
Rumors of a possible sale come at a critical time for Peloton, whose market value had fallen to $8 billion after a high of $50 billion a year ago.
Amazon and Nike are reportedly interested in buying Peloton, whose value has plummeted over the past year.
there are also others anonymous potential suitors interested in buying the exercise equipment company, though no deal is imminent on the horizon.
Rumors of a possible sale come at a critical time for Peloton, whose market value plummeted to $8 billion after peaking at $50 billion a year ago.
The company has failed to reach the heights that allowed it to make a fortune selling high-end exercise bikes and treadmills during the first year of the pandemic.
The deal would make sense for Amazon, which could have multiple potential ties between Peloton and its existing businesses, the WSJ reported.
Amazon’s fleet and logistics arm could help with Peloton’s supply chain issues and a Peloton subscription could be bundled with Amazon Prime, which offers users a waiver of shipping costs, a streaming service and more. for a monthly or annual fee, the WSJ reported.
Its quarterly revenue has been falling steadily in recent months due to falling demand. Although the company refers to its latest time period as Q1 2022, its earnings for that period were released last November.
Peloton co-founder John Foley said “rumors that we are stopping all bike and tread production are false” in response to the leaked memo in January.
Amazon has already bundled other carriers’ services into Amazon Prime, which will cost $139 a year starting this month.
Amazon has also been pushing connected health in recent years, launching its Halo Health and Wellness tracker.
Last week, Blackwells Capital called on Peloton’s board of directors to remove CEO John Foley immediately, accusing him of deals that set high fixed costs and 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 20-year, 300,000-square-foot lease for offices in New York, among other things.
The investment firm, led by Jason Aintabi, has also urged the board to put the company up for sale to a buyer such as Walt Disney Co, Apple Inc, Sony Group or Nike Inc, Reuters reported on Sunday.
In January, it was reported that Peloton was considering cutting jobs and raising prices as demand for its equipment plummets amid record inflation.
The fitness giant has sought help from consulting group McKinsey & Co. to get its finances in order after it cut its future earnings outlook for 2022 by $1 billion last November, to between $4.4 billion and $4.8 billion. billion.
Days later, the company’s share prices plunged 27 percent to $24.22, a two-year low.
The big drop came after a leaked presentation revealed that the company has seen a “significant reduction” in demand for its products.
The report, first seen by CNBC, said the company planned to temporarily pause bike production in February and March and will not make the Tread treadmill for six weeks, beginning in February.
The company is reportedly not looking to produce any Tread+ machines in fiscal 2022 and has thousands of bikes and treadmills in warehouses or on cargo ships.
It is unknown how many products are currently in warehouses.
Foley attempted to quash the damaging ‘rumors’ in a statement, saying: ‘The rumors that we are stopping all production of bikes and Treads are false.’
He added that the company had “experienced leaks” this week “containing sensitive information that has led to a number of speculative articles in the press.”
But he said this information was “incomplete, out of context and did not reflect Peloton’s strategy,” adding that the leaker has been identified and legal action will be taken.
Last May, the company had announced it was building a $400 million warehouse in Ohio to speed up production, but the facility isn’t expected to be ready until 2023. Since then, the company has declined in value by $40 billion. .
The scandal-plagued company has seen its share prices change dramatically over the year as it has been embroiled in bad press.
In May of last year, the company was forced to recall 125,000 treadmills following reports of multiple injuries and the death of a child in an accident. US regulators are investigating the company for the injuries.
Peloton received an additional 72 complaints of adults, children and pets being pushed under the back of the treadmill, resulting in 29 injuries, the Consumer Product Safety Commission (CPSC) said.
The security agency also released a video showing how a person could be trapped by the device.
Mr. Big was killed in the first episode of the Sex and the City reboot And Just Like That after suffering a heart attack after exercising on a Peloton bike.
In November, it cut its full-year outlook by as much as $1 billion, and analysts warned that a rough road lay ahead.
Peloton also suffered bad publicity for an episode of the reboot of Sex and the City And Just Like That, which suggested that the company’s exercise bikes could be lethal.
Carrie Bradshaw’s husband, Mr. Big, collapsed on the ground moments after finishing a cycling session with his favorite instructor. He died of a heart attack in the episode.
Peloton later responded that his team did not contribute to the fictional character’s death, which he attributed to his smoking and unhealthy diet.
Peloton later responded with a parody ad of its own, but backed off after actor Chris Noth, who plays Mr. Big, was accused of sexual assault.
The company also announced earlier this week that it is considering closing 20 percent of its showrooms after cutting its full-year outlook by $1 billion.
One executive said 15 of Peloton’s 123 showrooms “are on the line” as the company looks to cut costs.
During a recent call, management discussed asking retail store employees to take on more responsibility by manning customer service lines when they’re not busy in the store, CNBC reported.
Peloton will release its second-quarter figures on February 8.
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