Amazon might buy Peloton and make its subscription a Prime perk

Shawn Knight

Posts: 14,127   +154
Staff member
The big picture: New York City-based exercise equipment company Peloton maximized its potential during the pandemic, selling its Internet-connected stationary bikes and treadmills to people looking to stay fit – and stay in touch with others – during the uncertain period. As restrictions eased and life started getting back to normal, excitement in Peloton cooled. Now, the once hot company could consider cashing out.

In its most recent earnings report from November, the company reported a net loss of $367 million and said sales of its fitness products were down 17 percent. A voluntary recall last May didn’t help matters, either.

On Friday, the company’s stock closed at $24.60, down from a high of $162.72 in December 2020 and lower than its $29 IPO price from September 2019. It’s up more than 16 percent today, however, following a recent report from The Wall Street Journal claiming Amazon and other suitors are interested in an acquisition.

Sources told the publication that Amazon has been speaking with advisors about a potential deal, but there is no guarantee that an offer will be put on the table or that Peloton would entertain it.

Peloton has a market cap of $9.78 billion as of writing, but that shouldn’t be much of a concern for Amazon. The e-commerce giant is currently worth $1.62 trillion and brought in more than $14 billion in profit in its most recent quarter.

Amazon could potentially buy Peloton and turn its subscription service into yet another Amazon perk, further helping the company differentiate itself from the competition and justifying its recently annual Prime subscription price hike.

Peloton is set to announce its latest quarterly results on Tuesday.

Image credit: Andrew Valdivia

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mrvco

Posts: 172   +164
This could make sense for Apple or Amazon if they were to support 'certified' third-party exercise equipment. They can keep selling the 'premium' hardware, but I don't think that scales well enough for either company's ambitions.
 

captaincranky

Posts: 18,732   +7,671
They can keep selling the 'premium' hardware, but I don't think that scales well enough for either company's ambitions.
I'm pretty sure Peloton's profit margins are fairly inflated, due to the fact that said equipment is the company's bread and butter. They're pretty much in a market with little competition.

So, Amazon, (or another suitor with deep and diverse pockets), could realistically offer the same quality, at a lower price.

In other words, adjust their expected Peloton RoI to reflect the larger company's overall profit margin..