The rumors started flying on Friday afternoon…
Peloton is on the auction block after the stock crashed 80%.
Top FANG stocks are looking to pounce. And they may view this as a chance to buy the #1 connected fitness company at a huge discount.
FANG tech stocks are under pressure. And they may soon be replaced with a new group of market leaders known as MACE stocks.
Amazon (NASDAQ: AMZN) is rumored to be in discussions with Peloton’s bankers.
An acquisition would allow Amazon to sell Peloton bikes. Plus, Peloton’s subscription service could be tied-in with Amazon Prime.
Reports also indicated that Disney (NYSE: DIS),Nike (NYSE: NKE) and Apple (NASDAQ: AAPL) are evaluating the deal.
Apple may be the most logical buyer of Peloton.
The company is already in the health space with the Apple Watch. The company views connected fitness as an important category for growth.
Apple is also sitting on around $80 billion in cash. And the company generates over $100 billion in annual cash flow.
Meanwhile, Peloton currently has a market value of $10 billion. That would make it a small acquisition for Apple.
Why Peloton Is For Sale
Peloton became a stock market darling during the pandemic. With gyms closed and people stuck at home – sales of the Peloton Bike soared.
Peloton does around $4 billion in annual sales. And the company has 2.8 million subscribers.
However, sales have started to slow as the pandemic comes to an end. And the unprofitable company has seen its financial losses pile up.
Peloton temporarily halted production of its bikes and treadmills in January, according to CNBC. The company said that it’s reviewing the size of its workforce and reducing production levels.
In late January, the company came under attack from an investment manager called Blackwell Capital. The hedge fund has called for the CEO’s resignation. And encouraged the company to put itself on the market.
Company insiders own Class B shares with super voting power. This effectively gives them 80% of the votes. A deal to acquire Peloton would require the votes of these insiders.
Pressure from shareholders including Vanguard, Blackrock and Tiger Global could encourage the company to explore a deal.
Peloton stock IPO’d at $29 in 2019. The stock soared to $162 in December 2020. And this morning it is trading around $30.
Peloton’s poor stock performance is the primary reason the company is for sale.
Peloton reports earnings on Tuesday Feb. 8. That report may give us details on the company’s performance and plans.
FANG stocks including Amazon and Apple are looking to secure their dominance. And that means buying up companies like Peloton that can help grow their business.
However, a new group of next generation stocks will dominate the market in the coming years.
I call these MACE stocks. And they could be like buying Netflix in 2010 or Tesla Motors (NASDAQ: TSLA) in 2011 – which I did in my real-money portfolio.
You may not be familiar with MACE stocks.
However, I’d be willing to bet that these stocks are “the next FAANG stocks.” And that’s why I’m personally planning to invest over $100,000 in these stocks.
Yours in Wealth,
Full Disclosure: Ian Wyatt owns shares of Apple, Amazon and Disney.