Nike could gain 3 huge strengths in buying Peloton. Here's why analysts say it's still a bad idea.

• Nike is exploring the possibility of buying Peloton, the Financial Times reported. 
• It could off some major benefits to Nike, including access to Peloton's millions of subscribers.
• But analysts say it's a bad move for Nike due to Peloton's hefty losses and reputational damage.

Nike buying Peloton could have major upsides for the sportswear giant — but Wall Street analysts still stay it's the wrong move. 

After a challenging month that included layoffs and reports of a production halt, Peloton, the maker of a connected fitness bike and treadmill, is exploring the possibility of a sale, the Wall Street Journal reported Friday. Among the interested parties are Amazon — which the Journal reported has already spoken to advisors about a possible acquisition — and Nike, which the Financial Times says is in the early stages of exploring the purchase. 

Peloton stock jumped 25% on Monday following the reports that Amazon and Nike may be interested in a deal.

Acquiring Peloton could be a boon for Nike's business in three key areas, Wedbush analysts Tom Nikic and Ezra Weener wrote in a report published Sunday. 

For one, it would give Nike a new way to interact directly with existing or potential customers. Peloton offers live and on-demand fitness classes for bike and treadmill users, and those who don't own the company's fitness equipment can sign up for a standalone subscription as well. Peloton has said it expects to have between 3.35 million and 3.45 million subscribers by the end of fiscal year 2022.

Buying Peloton would also block Nike's competitors from doing future apparel or footwear collaborations with Peloton. While Peloton recently launched its own private-label apparel brand, it had previously teamed up with Adidas and Lululemon on Peloton-branded apparel (although Peloton and Lululemon are currently locked in a legal battle over patent infringement and unlikely to collaborate again). 

Another benefit to Nike is Peloton's technical expertise. Nike already has patents for fitness equipment, as evidenced by its recent patent infringement suit against Lululemon's Mirror Home Gym. Buying Peloton could allow Nike to make good on existing patents.

Still, buying Peloton is the wrong move for Nike, the analysts say. Peloton already loses a significant amount of money, and at-home fitness may be fading as the pandemic gradually subsides and future lockdowns look unlikely.

Plus, Peloton's public perception has taken a hit: Fictional TV characters keep dropping dead after riding their Peloton bikes, and the company had to recall its treadmill following multiple reports of injuries and the death of a child. 

Those factors combined make it the wrong move for Nike, the analysts said.

"We think there's a lot to like about NKE, but a potential PTON acquisition isn't one of them," they wrote. "We're skeptical that a deal would even make strategic/financial sense, given the hefty losses NKE would have to absorb and the fact that it may detract from the company's robust growth opportunities in its core business."

"We'll continue to monitor the situation, but for now, we think it's mostly 'noise,'" they added.