Peloton’s Cheaper Than Ever for a Takeover
It has been just over three months since activist investment firm Blackwells Capital targeted Peloton Interactive PTON +16.52% , and the case for change, including a sale of the company, may have only grown stronger.
Peloton Interactive (ticker: PTON) stock plunged 8% this past week after fiscal-third-quarter earnings and forward guidance came in below Wall Street expectations. The weak results—coupled with Peloton’s plans to borrow $750 million in a balance-sheet-saving move—came three weeks after Blackwells reiterated its calls for Peloton to sell itself.
Now, any potential buyer would be able to scoop up the company at an even deeper discount: Its shares have lost about half their value since Blackwells’ stake was made public on Jan. 23. They tumbled to a new intraday low this past week of $11.25. Peloton, which had a $45 billion market capitalization less than two years ago, is now a $4.5 billion company—making it an easy acquisition for a well-heeled tech giant like Apple AAPL +3.19% (AAPL) or Amazon.com AMZN +5.73% (AMZN).
Blackwells declined to comment. Peloton didn’t respond to a request for comment.
Even in its salad days, Peloton was viewed as a takeover candidate that could nestle in with a tech giant or leading fitness brand like Nike NKE +4.74% (NKE). But with the sudden drop in price, any potential buyers may want to tread carefully.
“The question is: Is it too cheap to ignore, or is it cheap for a reason?” Simeon Siegel, managing director at BMO Capital Markets, tells Barron’s, adding that the brand should focus on its loyal customers, rather than chasing growth.