Daily Brief: Amazon And Nike Might Be About To Enter The Race To Buy Peloton

Daily Brief: Amazon And Nike Might Be About To Enter The Race To Buy Peloton

about 2 years ago3 mins

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Reports emerged over the weekend that Amazon and Nike both want to buy fitness company Peloton, and they’re already squeezing into leggings for their head-to-head.

What does this mean?

Peloton was in the best shape of its life in the depths of the pandemic, with its valuation hitting a nearly $50 billion high as recently as a year ago. But post-lockdown freedom has taken its toll on the company, whose stock has now fallen over 80% since those heady days. That puts Peloton at a valuation of just under $8 billion.

Cue Amazon and Nike, two companies with an eye for a bargain. The Everything Store might see Peloton as a good fit as it continues to expand into the health and wellness space, not to mention allow it to market its products to Peloton’s almost 3 million subscribers. Nike, meanwhile, might simply want to build out its already extensive fitness community – and kit out Peloton’s instructors head to toe in swooshes, of course.

Peloton stock price

Why should I care?

For markets: Undo! Undo!

Peloton’s stock jumped over 30% after the reports surfaced, and a “short squeeze” could push it higher still. See, 12% of all Peloton’s stock is currently being “shorted”, meaning some investors are selling its shares to others in hopes of buying them back at a lower price later on. In other words, they’re betting Peloton’s share price will fall. But now that their bet’s being proved wrong, those “short sellers” might buy the shares back before their losses climb even higher – a move that’ll push Peloton’s stock up even more.

The bigger picture: Is Apple next?

Some analysts think Apple – which has a pile of cash burning a hole in its pocket – might want to bolster its own fitness subscription business by buying Peloton too. But there’s one flaw with that theory: Peloton’s weighty exercise equipment doesn’t fit with Apple’s notorious strategy of urging customers to upgrade their gadgets year in, year out.

Keep reading for our next story...

Tyson Beat Expectations Despite Its Higher Prices

Tyson image

Tyson Foods reported better-than-expected quarterly results on Monday, as the US meatpacker charges Americans an arm, a leg, and a trotter or two for their weekly shop.

What does this mean?

Tyson might not be the most glamorous of companies, but America’s shoppers need what it’s selling: everyone’s gotta eat, after all. And you have been hungry: Tyson sold its products for 20% more on average last quarter than the same time in 2020, and it still managed to sell the same amount. That pushed its operating profit – which excludes interest payments and taxes – up 40%. Tyson’s not just making money either: the company’s on track to save as much as $400 million this year. Throw in a better-than-expected sales outlook for this year, and investors were sold: they sent Tyson’s stock up 5%.

Tyson Foods stock
Source: The Wall Street Journal, FactSet

Why should I care?

Zooming in: The US vs Tyson.

The US government probably isn’t so happy, given that it sees Tyson as one of a small group of meatpackers that holds too much power over prices. In fact, it released a study in December showing that Tyson and three other major producers had increased their combined profits by 500% since the start of the pandemic. That might be why the government announced last month that it’ll be spending $1 billion on funding smaller firms, which should promote competition in the industry and ultimately bring down prices.

The bigger picture: Buh-bye, Beyond Meat.

Tyson’s reign doesn’t look like it’s under threat from Beyond Meat either: Dunkin’ recently ditched the plant-based company’s food from its menu, and TGI Fridays said it won’t be adding any more of its products. This, despite the fact they were two of the earliest companies to jump on the meat-substitute trend. Some analysts think that’s a sign of things to come, and that fast food chains like McDonald’s and KFC – which have only boarded this bandwagon recently – will eventually follow suit.

Beyond Meat stock
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