Amazon buying Peloton would give it several benefits, including Prime boost: Truist
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On Friday, it was reported that Amazon (NASDAQ:AMZN) has met with advisors to discuss buying Peloton (NASDAQ:PTON). Should a deal come to fruition, it would lead to many benefits for the tech giant, including benefits for its Prime subscription service, investment firm Truist said.
In a note to clients, analyst Youssef Squali, who has a hold rating and $68 price target on Peloton, noted that Amazon and Apple (NASDAQ:AAPL) are the "more likely suitors" for Peloton, though Nike (NYSE:NKE) and Alphabet (GOOG, GOOGL) have also been mentioned. 
If Amazon were to do the deal, it would give them a strong entry in the health and wellness space, along with obvious benefits for Prime. 
"Amazon has explicitly entered this industry through its Halo brand of wearables and software (launched in 2020), which could presumably integrate well with and be dramatically expanded by Peloton," Squali wrote, adding that "Peloton would add a different dimension to [Amazon] as it would give it "an experiential brand."
Peloton (PTON) shares surged in premarket on Monday, gaining 30% to $31.98.
Regarding Prime, which has approximately 250 million subscribers across the globe, according to Squali, it would "dramatically improving the value proposition of both, and making it extremely hard for fitness competitors to follow suit." 
According to Peloton, it has approximately 2.7 million fitness subscribers, which Squali said could grow, given that they presumably overlap with Prime subscribers and Amazon's worldwide distribution could widen the appeal of Peloton. 
It could also help Andy Jassy-led Amazon win market share in the connected fitness space, with Amazon running the hardware business "at-or-near-breakeven for many years," to give it greater scale and market share.
Lastly, the company's logistics could help Peloton, which in the past, has struggled to ship products to its customers. 
"Amazon's expertise in logistics and fulfillment could help solve problems that have plagued Peloton over the last year," Squali explained. "Peloton has built out strong distribution and delivery capabilities but would gain materially from the expertise and breadth of Amazon's." 
Over the weekend, Wedbush called Apple (AAPL) a favorite to buy Peloton, with analyst Dan Ives saying it would help Apple's Fitness+ service and Apple Watch strategy.