The stock market finished last week with a good-sized rebound as investors are still trying to figure out whether the bull market from the beginning of the pandemic can continue. On Monday morning, market participants had measured optimism, and futures contracts on the Nasdaq Composite (^IXIC 0.10%) were up about a quarter percent as of 8:15 a.m. ET.
The big news in premarket trading came from Peloton Interactive (PTON -2.24%), with those following the interactive fitness equipment manufacturer hearing stories about how a larger company might swoop in to buy the ailing company on the cheap. Let's look more deeply into those stories, and then, you'll learn more about the latest financial report from On Semiconductor (ON 6.24%) that's sending its stock higher in the premarket session.
Image source: Getty Images.
A suitor for Peloton?
Shares of Peloton Interactive were up 35% in premarket trading Monday morning. The move higher clawed back only a tiny portion of the massive losses the stock has seen in recent months, and the news moving the stock involves the likelihood of opportunistic buyers scrambling to pick up the promising company's assets and subscriber base on the cheap.
Over the weekend, reports surfaced that a host of companies were at least considering making an acquisition bid for Peloton. News that Amazon might look at buying out Peloton came out late Friday, while other reports suggested athletic footwear giant Nike might look to purchase the maker of stationary bikes and treadmills.
The speculation then spread to other companies that some investors think should look seriously at Peloton. Among them are tech giant Apple, for which Peloton's base of workout content subscribers would be a good complement to its broader internet services business.
Activist investors have swooped in to make their case for major change at Peloton. Investors at Blackwells Capital have called for co-founder/CEO John Foley's ouster. Blackwells suggested that Walt Disney could potentially have buying interest as well.
Even if a buyout bid comes, which is far from certain, it's unlikely to be anywhere close to the highest levels at which the stock traded over the past year. That will make any acquisition bittersweet for many investors who had high hopes for the fitness specialist's longer-term prospects. Nevertheless, it could start a buyout binge among the many companies whose stocks have fallen precipitously in recent months.
Game on for On Semi
Elsewhere, shares of On Semiconductor moved higher by 7% Monday morning. The chipmaker announced strong fourth-quarter financial results that gave investors confidence that the strong environment for semiconductor companies is likely to continue into 2022.
On's results were outstanding. Revenue rose 28% year over year to $1.85 billion. Adjusted earnings of $1.09 per share were more than triple year-ago numbers. 2021's full-year revenue growth matched the quarterly figure, and adjusted earnings of $2.95 per share rose almost 250% year over year.
On noted that its operating income and free cash flow figures rose at a substantially faster pace than overall sales. The company has worked hard to focus on its most lucrative potential markets, including electric vehicles, advanced driver assistance systems, alternative energy, and industrial automation. Those strategic moves have boosted On's margins and also given it a higher profile in the semiconductor industry.
On expects the good times to continue, with first-quarter revenue projected for between $1.85 billion and $1.95 billion and adjusted earnings of $0.98 to $1.10 per share. Shareholders liked that outlook, and they're hopeful On will be able to keep moving higher as the year proceeds.
