Why Peloton Shares Are Surging Today: Is A Takeover In Its Future?

Peloton Interactive (PTON) saw its shares climb in premarket trading early Monday morning amid reports of a takeover.

Investor Blackwells Capital, which owns less than 5% of Peloton, issued a letter in January demanding that Peloton co-founder and CEO John Foley be fired and that the company seek a sale, which could include acquisitions from high-profile companies such as Apple, Nike, Amazon and Disney, The Wall Street Journal reported Friday.

As of early Monday morning in premarket trading, Peloton’s stock was up over 28%. On Friday, the company’s shares jumped as much as 30% in after-market trading following the report from the Journal, the Financial Times said.

Peloton has seen its shares fall as much as 80% from its high a year ago, with a valuation that stands at just over $8 billion as of Friday’s $24.60 a share close, according to Bloomberg. The company had a valuation of $50 billion 12 months earlier, the Financial Times reported.

Peloton sells the Bike and Tread exercise equipment that comes with a paid membership that includes virtual classes. The company saw demand for its exercise equipment drop as consumers returned to gyms following lockdowns during the pandemic.

The stock surge comes after Peloton saw its shares plummet further after Showtime's “Billions” and HBO's “And Just Like That...” shows linked its exercise equipment to character heart attacks, making it a target for a takeover.

Sources for Bloomberg said Peloton started working with an advisor following the stock dip and is exploring the takeover venture, which may not lead to a sale.

While Nike and Amazon have not had a direct conversation with Peloton about a purchase, the Financial Times reported that Nike is considering a separate bid for the company.

However, Wedbush’s Dan Ives said that a deal with Apple would make sense as the tech company has a health focus, while Cowan’s John Blackledge doesn’t believe that Amazon is a good fit based on its mass-market selling focus, as reported by Bloomberg.

As of Monday premarket trading, shares of Peloton were trading at $31.95, up $7.35, or 29.88%.