Peloton Interactive Inc (NASDAQ:PTON) stock is seen rallying some 23% ahead of Monday’s open in New York amidst a chorus of bid speculation suggesting the embattled exercise at home brand could be on the auction block.
A sprinkling of media reports has in recent days separately linked Amazon.com Inc (NASDAQ:AMZN) and Nike Inc (NYSE:NKE) as potential suitors (one report came via the Wall Street Journal and the other from the Financial Times, both cited unnamed sources).
It comes after last week’s 7% share price fall, extended a six-month decline of some 80% as the spin-bike brand saw a rapid deceleration of demand as Covid lockdowns ended, forcing it to slash costs and rework manufacturing schedules.
Technology and consumer brand stalwarts are ‘circling’, according to stockbroker Wedbush, with analyst Daniel Ives saying he’d be shocked if Apple Inc (NASDAQ:AAPL) is not aggressively involved in any potential deal process.
“For Cook & Co, acquiring Peloton would be a major strategic coup and catalyze the company's aggressive health and fitness initiatives over the coming years,” the Wedbush analyst said in a note.
“With 2.8mln paid subscriptions today and a very strong/unique competitive moat, Apple acquiring Peloton would be both an offensive and defensive acquisition in our opinion.”
Ives highlights that cross-selling services into the Peloton ecosystem would make “a ton of strategic sense” for the likes of The Walt Disney Company (NYSE:DIS), Nike, Amazon or Apple.
Making the offensive case for an Apple takeover of the spin-bike group, Ives said: “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.”
The analyst however notes that Apple is not an acquisitive company and outside the US$3.2bn purchase of Beats in 2014 the iPhone maker has been “very shy and hesitant to head down the M&A path”.
He also reckons that a deal for Peloton would be priced in the range of US$12bn to US$15bn.
Even if it’s not within the modus operandi, Apple can obviously afford to pay the price and according to the Wedbush analyst it may not have too much choice.
“Apple may be forced into this deal if Amazon, Nike, or potentially Disney aggressively goes after Peloton in a defensive blocking strategic move.”
A rival buyer would be propelled significantly in health and fitness and gain a major foothold into the living rooms of consumers globally, the analyst added.