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Shares of Peloton surged more than 30% in extended trading Friday after the Wall Street Journal reported Amazon has approached the connected fitness company about a potential deal.
Other potential suitors are circling, the Journal reported, adding that no deal is imminent and there may not be one at all.
Peloton is not yet running a formal sales process, but there is real interest in the company, a person familiar with the talks told CNBC.
A representative from Peloton didn’t immediately respond to CNBC’s request for comments. Amazon declined to comment.
The potential interest from outsiders comes as Peloton shares have tumbled in recent months and activist group Blackwells Capital, which has a less than 5% stake, has urged the company publicly to consider a sale.
Peloton’s market cap of roughly $8 billion has fallen from a high of nearly $50 billion about a year ago. Investors poured into the stock after the onset of the Covid pandemic, sending shares up more than 440% in 2020. But they’ve started to flee as many realize that future growth will come at a much higher cost. Shares closed Friday at $24.60, well below its IPO price of $29.
Peloton could be an attractive target, given the selloff, for any company looking to further its ties to the health and wellness industry. Amazon has been investing in connected health for years, including by launching a Halo Health and Wellness tracker. And last year, Amazon added interactive home video workouts and guided meal planning to Halo subscriptions.
It’s not immediately clear what Amazon would do with Peloton’s hardware and technology, but it’s possible Amazon could integrate Peloton’s offerings into its growing devices unit, which houses its popular Fire TV streaming sticks, voice-activated Echo smart speakers and an expansive lineup of connected home products.
Peloton’s original Bike, which costs $1,745 including shipping, would become the most expensive hardware Amazon sells, aside from its $999 Astro home robot. Peloton’s Bike+ is even more costly, at $2,495. Its Tread retails for $2,845.
According to the Journal, Amazon’s existing businesses, such as its logistics arm, could also further help Peloton address ongoing supply chain issues. A monthly Peloton subscription, which is $39 for people who own one of its connected devices, could also theoretically be bundled into Amazon’s Prime membership, it said.
In November, Peloton slashed its outlook for the year as it reported slowing revenue and waning subscriber growth. Chief Executive John Foley warned at the time that it was becoming more difficult for Peloton to project growth.
CNBC reported last month that Peloton is working with consulting firm McKinsey to look for areas to cut costs, as it also looks to right-size its production.
Foley said in a statement in January that Peloton is “taking significant corrective actions to improve our profitability outlook and optimize our costs.”
Peloton is set to report fiscal second-quarter results on Tuesday, after the market close, where Foley and his team are expected to further address these issues.
Amazon has made several large, notable acquisitions in recent years. Amazon purchased upscale grocer Whole Foods for $13.7 billion in 2017, its biggest deal by far. Last May, it inked a deal to acquire MGM Studios for $8.45 billion.