Peloton’s Stock Price Surge Makes Sense in Deal Land
Normally a $1 billion share offering would erode market value. But visions of a takeover are dancing in investors’ heads.
This could be a for-sale sign.
Photographer: Adam Glanzman/Bloomberg
Fitness enthusiasts love cringeworthy motivational cliches such as “sweat is your fat crying” and “pain is just weakness leaving the body.” Investors have their own version. Their white-knuckle ride in shares of Peloton Interactive Inc. has them turning to the stock market’s favorite when-things-get-hard platitude: “The cheaper it gets, the more attractive it is to an acquirer.”
At least that’s the hope. Before Tuesday, Peloton shares were down 69% for the year as safety recalls, ballooning costs and weaker demand for luxury at-home fitness equipment knocked the pandemic winner off course. More than $30 billion of shareholder value was wiped out, much of it on Nov. 5 after a grim earnings report. What changed on Tuesday was that Peloton announced a plan to sell $1 billion of stock, its first time offering shares in the company since going public in 2019. The market responded by driving the price as much as 15% higher.