Welcome back to between bells,
Peloton socks soaring more than 25%
today after reports that multiple companies including
Nike and Amazon were looking at acquiring the stationary bike maker right now,
there's no official comment from peloton.
Nike or amazon about this.
The news comes at an interesting time.
Two weeks after peloton investor Blackwells Capital called on the exercise
giant to fire its Ceo and sell the company joining us.
Now to discuss is victoria's song wearable tech reviewer for the verge.
Victoria welcome back to the show.
Does Nike and Amazon does a buyout from these two
companies make sense and how could it help out peloton?
It doesn't, it doesn't make sense because
Pela
has been going through a rough time lately and you know,
Nike on the one hand has been in fitness tax before, but
basically decided to stick to a software side and
then amazon is very late to the fitness game.
So buying peloton might help them in terms of hardware, but
it's kind of one sided.
A lot of this would be helpful for peloton and big costs and a risk for the others.
So Nike and Amazon are probably two of the rumored buyers.
That makes the most sense, but it would be, it would be a big cost for
debatable payout.
There's another company we have to mention Apple
also in talks of buying the company,
what would that look like victoria for peloton and what would the benefits be there.
Well, you know,
Apple is the one that a lot of people
think of immediately just because Apple has a really,
you know, dedicated uh commitment to health checks.
However, I actually don't think this makes sense at all.
It's very one sided because you know,
peloton has had a lot of trouble with their
supply chain and that's obviously something that Apple is very
famous for being good at.
However, there's no real benefit for Apple at this point in time,
Peloton is greatest asset is its digital content,
but Apple's already proven with Fitness Plus that it could do it
much cheaper on its own and it wouldn't be constrained by hardware.
Apple has the
Apple watch and if you look at Fitness Plus,
all of the classes are equipment agnostic,
meaning you can go to any gym anywhere and
still use your Apple watch and get these classes.
However,
Peloton ties a lot of its classes to its hardware to get the most benefit out of it.
And you know, once you buy a stationary bike or a treadmill,
you're not looking to upgrade that anytime soon.
So it doesn't really add up there, all the benefit would be for peloton,
Whereas Apple doesn't really gain much from it.
If the company is sold, how much do you think it would be worth victoria?
That's really hard to kind of figure out right now,
just because the company's valuation went way up during the pandemic
and is now at a fraction of what it would be,
but you know, where we are probably looking in the billion ish rate,
who knows like it's hard,
it would be similar, like if amazon were to buy it,
I think it would be similar to when it shelled out big for whole foods,
but it's really kind of hard to judge what it would sell for right now,
given the complete reversal of fortunes, it's had,
do you think peloton still has room to run on its own and how could they,
or could they actually turn things around or do you think it's
too late for this company to do it on their own?
I don't necessarily think it's too late for the company to do it on their own.
It's just going to, you know,
require a lot of discipline and cutting back during the pandemic peloton,
like they were spending hundreds of millions of dollars willy nilly, you know,
like they spent $100 million to ship
their equipment by air because the delays were
just getting ridiculous and people were getting upset.
But then it also spent 420 million to buy pre
core and another 400 million to build its own factory,
this is a huge amount without taking into
account the fact that once the pandemic ends,
you know,
a good chunk of people tired of being stuck at home
will go outside and want to work out in gyms again.
So, you know,
I think they overextended themselves during the boom time
and what we're going to see now is them
trying to save costs here and there and if they're successful at doing that
and successful at anticipating what demand will
look like in the post pandemic market,
then they have a chance,
but it's not going to be without a lot of growing pains and cutting back and you know,
they have a lot of competitors now,
Uh, now that everyone's kind of seen what at home fitness can do.
So they're just really going to have to figure out a way
to provide that extra value and maybe decouple from expensive hardware.
We'll have to see, let's take a step back here.
Peloton stock was down 31% for the year, 84% over the past year.
When did things really start to get bad for this company?
I think things started getting bad once we all got vaccinated or you know,
a good majority of us got vaccinated and you know,
we could go outside again and people were starting to realize, oh,
I really missed the community that I have in my brick and mortar gems.
And then when you kind of consider the fact that,
you know, there were the recalls last summer where the peloton tread
and both treadmills were found to have some design flaws,
particularly the tread plus and you know, unfortunately a child die.
So that's kind of really hard to get out of your mind on,
on one hand and then just from there, there were just so many setbacks just, you know,
they cut the price of the tread,
but competition has been heating up so it really didn't do much for them.
And then on top of that there's just, you know,
people are dying on peloton on popular tv shows.
So it just kind of creates this image in their head there.
It's just one punch after another for them.
Yeah, we know their earnings report will come out tomorrow.
I know you will keep an eye on that. We will here at Cheddar news.
Thank you so much for your time and insight,
victoria's song wearable tech reviewer for the verge.