Peloton Interactive PTON.US is an exercise equipment and media company. Peloton's flagship products are treadmills and stationary bikes with internet access, which enable monthly subscribers to remotely participate in organized activities via streaming channels.
The company was one of the beneficiaries of the coronavirus pandemic as people, unable to hit the gym, instead decided to set up places to work out at home. Thanks to the pandemic and company revolutionary approach to the distribution of training and entertainment equipment, Peloton has so far attracted nearly 2.5 million customers worldwide. Despite the satisfaction of the platform users, the company's stock price recently recorded an almost 80% decline due to mismanagement and poor quarterly results.
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The number of quarterly subscribers quitting Peloton's services remains low, which reflects the overall satisfaction with the services provided by the company. Source: Peloton
A time of big changes
Co-founder John Foley has left his current CEO position, limiting himself to the role of executive chairman. Foley on Tuesday 7 February issued a statement in which he admitted that the company was not managed in an optimal way, taking the blame for himself and the previous management. Meanwhile, the market reacted euphorically to the potential takeover news and changes, which include the reduction of employees by 20%, i.e. by about 2,800 positions, a reduction in the number of warehouses and the extension of contracts with external suppliers, which, according to the company, will save $ 800 million in 2022.
Of course, the change of the CEO of the company, about which information was provided by the first The Wall Street Journal, did not go unnoticed. The new CEO of Peloton from Wednesday, February 9, will be Barry McCarthy, formerly the CFO of such giants Spotify SPOT.US and Netflix NTFLX.US.
Will the Peloton be taken over?
The Wall Street Journal reported after the market close that the decline in Peloton's share prices made the company an attractive target for mergers and acquisitions. WSJ also reported that Amazon has approached advisors regarding a potential transaction. The Financial Times reported that Nike is also preparing a takeover bid for Peloton. Other potential buyers are Apple and Walt Disney. Peleton's management has long been under pressure from its shareholder Blackwells Capital to sell the company.
Due to the fact that regulators approach takeovers from 'BigTech' companies such as Amazon AMZN.US or Apple APPL.US more and more cautiously, it is the acquisition by Nike that seems to be the optimal solution for the company. In turn, such an offer may be less attractive for the company, because Nike is obviously not able to compete financially with giants such as Amazon or Apple.
Potential acquirers to consider by Peleton's management. Source: Blackwells Capital
It is worth mentioning that in recent weeks, almost all companies that benefited significantly during the coronavirus pandemic, such as Spotify, Netflix or PayPal, have recorded strong declines. Meanwhile, Peloton gained almost 40% within the last 5 days, which may herald a potential trend reversal.
Peloton (PTON.US) share price has been moving lower for over a year now and has lost 80% of its value. However, strong upward move at the beginning of this week allowed the stock to jump above the upper limit of a short-term downward channel, signalling that a larger upward move may be on the cards. Source: xStation5
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