PTON Stock Alert: The Takeover Rumors Sending Peloton ‘Running’ Higher

Peloton (NASDAQ:PTON) stock is up 25% this morning following reports that it is attracting several potential suitors. Perhaps most interesting is the suggestion that e-commerce giant Amazon (NASDAQ:AMZN) could be making a bid.

Peloton (PTON stock) sign on city storefront
Source: JHVEPhoto / Shutterstock.com

The Wall Street Journal reported that Amazon has been working with advisors on a deal. There is no guarantee that the tech company will follow through, or that Peloton would accept. Investors should also note that other companies beyond Amazon appear to be interested.

What Happened With PTON Stock

Investors also know that Peloton was a hot stock in the early days of the pandemic. With gyms closed, many consumers turned to its at-home fitness equipment. Now, that narrative is changing. PTON stock is down nearly 80% in the last 12 months.

This decline is attracting the attention of some big names. Last month, an activist investor demanded that Peloton remove its CEO and pursue a sale. At the time, potential suggested buyers included Apple (NASDAQ:AAPL) and Nike (NYSE:NKE).

Now, investors are excited that Amazon is part of the conversation. The company may be looking to increase its involvements in healthcare, and the chance to market its products to Peloton’s subscriber base. Amazon introduced its wearable Halo product in 2020, competing with the Fitbit and other health-tracking devices.

Why It Matters

The decline in PTON stock got worse after its latest quarterly earnings report. There, executives shared that Peloton missed Wall Street estimates and that subscriber growth is slowing. Reports also circulated that Peloton was pausing production of its bikes and treads in February and March.

What’s Next for Peloton

Peloton stock is going to get a nice bounce today on rumors that it will be acquired by a big, blue-chip company. However, until a deal is formally announced, the takeover reports remain speculation. It’s important for investors to keep in mind that a deal might not materialize, in which case PTON stock could fall even further.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


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