Peloton has become an almost unheard of niche company for fitness enthusiasts with an ample amount of disposable income, and is one of the media darling’s success stories of the pandemic. Its stock price soared in 2020, and so did sales, as people were stuck at home, unable to attend gyms but still desperate to stay in shape. Plus, the company found that people were craving the interaction that virtual instructors could provide almost as much as the calorie burn.
All in all, the pandemic has created a huge demand for product that the company simply could not have anticipated a year ago. On Monday, Peloton did something about it, by acquiring fitness-equipment company Precor for $420 million. Frustration was building for new customers because of the ridiculously long wait times they were facing to get their bikes. The purchase of Precor allows Peloton to shorten the wait time and deliver product much quicker.
“We have seen a ton of growth. No one would wish a global pandemic on anybody, but it’s been a tailwind for our business,” Peloton President William Lynch told Bloomberg. “Keeping up with that growth, which has been a moving target, has been a big company priority. As we’ve been investing in scaling our manufacturing, this is an area where Precor is very strong,” he added.
The deal allows Peloton to acquire 625,000 square feet of manufacturing capacity in North Carolina and Washington.
Peloton is not just a stationary bike supplier either, as it provides commercial-grade treadmills, ellipticals, climbers and strength-training equipment for gyms, colleges and hotels. This acquisition also brings roughly 100 research and development engineers to Peloton.
Oh yeah, that stock price I mentioned at the beginning of the story? In early trading Tuesday, the stock was at an intraday record of $160.56, up 11.2% from Monday’s close of $144.39. It’s grown roughly 400% in 2020, which values the company north of $42 billion.
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