Whatâs Going On Here?Reports emerged over the weekend that Amazon and Nike both want to buy fitness company Peloton, and theyâre already squeezing into leggings for their head-to-head. What Does This Mean?Peloton was in the best shape of its life in the depths of the pandemic, with its valuation hitting a nearly $50 billion high as recently as a year ago. But post-lockdown freedom has taken its toll on the company, whose stock has now fallen over 80% since those heady days. That puts Peloton at a valuation of just under $8 billion.
Cue Amazon and Nike, two companies with an eye for a bargain. The Everything Store might see Peloton as a good fit as it continues to expand into the health and wellness space, not to mention allow it to market its products to Pelotonâs almost 3 million subscribers. Nike, meanwhile, might simply want to build out its already extensive fitness community â and kit out Pelotonâs instructors head to toe in swooshes, of course. Why Should I Care?For markets: Undo! Undo!
Pelotonâs stock jumped over 30% after the reports surfaced, and a âshort squeezeâ could push it higher still. See, 12% of all Pelotonâs stock is currently being âshortedâ, meaning some investors are selling its shares to others in hopes of buying them back at a lower price later on. In other words, theyâre betting Pelotonâs share price will fall. But now that their betâs being proved wrong, those âshort sellersâ might buy the shares back before their losses climb even higher â a move thatâll push Pelotonâs stock up even more.
The bigger picture: Is Apple next?
Some analysts think Apple â which has a pile of cash burning a hole in its pocket â might want to bolster its own fitness subscription business by buying Peloton too. But thereâs one flaw with that theory: Pelotonâs weighty exercise equipment doesnât fit with Appleâs notorious strategy of urging customers to upgrade their gadgets year in, year out. | 