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Peloton shares jump 24% following reports that Nike and Amazon are looking to buy the pandemic darling.

A man riding a Peloton bike in his living room.
Peloton stock was among the early COVID-19 winners, but is down more than 80% since its pandemic highs.
  • Peloton stock rose 24% in premarket trading, fueled by reports of takeover interest from Nike and Amazon.
  • The market value of the digital-fitness company has dropped from $50 billion to $8 billion last year.
  • Dan Ives, a Wedbush analyst, suggested that Apple was a potential bidder for Peloton.

Peloton stock surged 24% Monday morning in pre-market sessions after reports that Nike and Amazon are considering takeovers of the troubled fitness brand.

The Wall Street Journal reported that Amazon is in talks with advisors regarding a possible deal. However, there is no guarantee that an offer will be made. Peloton stock rose as high as 30% after The Journal published its story.

Separately, The Financial Times reported Saturday that Nike was looking at making a bid.

Peloton was one of the first to benefit from the COVID-19 pandemic. People scrambled for fitness equipment as other venues were closed to stop the spread of the virus.

However, as the fear of being out subsided and lockdowns began to ease, the company was hit with disappointing sales, higher costs and lower demand for treadmills. An employee described the situation as "pretty grim." Peloton stock has fallen more than 80% since its pandemic peak.

The market capitalization of the US fitness-equipment manufacturer is currently $8 billion. This is a fraction of its peak worth of $50 billion last years. This opens the possibility of an opportunistic buyer buying the company at a substantial discount.

Blackwells Capital, an activist investor, wrote last month to Peloton urging it to fire its CEO James Foley. The letter was sent in response to a stock slump. In the letter, Blackwells Capital mentioned Apple, Disney and Nike as potential interested parties.

Dan Ives, a Wedbush analyst, said that it would surprise if Apple doesn't get involved in a possible bidding battle for Peloton. This acquisition would be a significant strategic coup that would build on its fitness initiatives.

Ives stated in a Monday note that Apple, via its Fitness+ subscription and Apple Watch strategy would be able leverage the Peloton services to significantly boost its healthcare initiatives, which have been a key strategic pivot for (Tim] Cook."

Peloton's acquisition is likely to be between $12 billion and $15 billion depending on the timing of the transaction and the competitive process.

He said that Apple may be forced to enter this deal if Amazon or Nike, or possibly Disney, aggressively pursues Peloton in defensive blocking strategies.

Peloton stock was up 24.5% at Monday's premarket, $30.64 per share. It is currently down 31% this year.

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