Peloton could be bought by Apple to boost healthcare initiatives
Acquiring Peloton could be a "major strategic coup" for Apple, according to Wedbush, with the purchase potentially helping boost Apple's moves in the health and fitness market.
Following the halt of production of bikes and treadmills due to waning consumer interest, Peloton has reportedly become an acquisition target. While the main attention has been on Amazon's possible bid for the company, analysts have put forward the case that Apple could be interested in acquiring the firm.
In a note to investors seen by AppleInsider, Wedbush analysts Daniel Ives and John Katsingris write that Apple could easily be one of the potential acquirers of the fitness company. For Apple, "acquiring Peloton would be a major strategic coup and catalyze the company's aggressive health and fitness initiatives over the coming years," Wedbush says.
"With 2.8 million paid subscriptions today and a very strong/unique competitive moat, Apple acquiring Peloton would be both an offensive and defensive acquisition in our opinion."
On the defensive side, a purchase by Amazon or Nike would give either company a "major foothold into the living rooms of consumers globally," with massive potential for cross-selling services. To Apple, such a purchase would be "a business model risk for its healthcare segment and future endeavors."
As an offensive purchase, Apple could use its Fitness and Apple Watch strategy to "leverage the Peloton services and flywheel to significantly bulk up its healthcare initiatives," a field Apple has consistently worked on.
Wedbush highlights that Apple doesn't seem to be an obvious candidate for acquiring Peloton, as it has largely avoided major acquisitions outside of its $3.2 billion Beats purchase in 2014, but it's still possible. With an expected sale price of between $12 billion and $15 billion, this seems a high figure for Apple to willingly pay, though it does have over $200 billion in available cash resources.
"We believe Peloton is a unique asset that would fit well into Apple's golden consumer ecosystem which makes us believe Cupertino could be a real bidder for this asset," the analysts conclude. "Apple may be forced into this deal if Amazon, Nike, or potentially Disney aggressively goes after Peloton in a defensive blocking strategic move."
Wedbush currently has a $200 12-month price target for Apple, with the iPhone maker designated with an "Outperform" rating.
Read on AppleInsider
Following the halt of production of bikes and treadmills due to waning consumer interest, Peloton has reportedly become an acquisition target. While the main attention has been on Amazon's possible bid for the company, analysts have put forward the case that Apple could be interested in acquiring the firm.
In a note to investors seen by AppleInsider, Wedbush analysts Daniel Ives and John Katsingris write that Apple could easily be one of the potential acquirers of the fitness company. For Apple, "acquiring Peloton would be a major strategic coup and catalyze the company's aggressive health and fitness initiatives over the coming years," Wedbush says.
"With 2.8 million paid subscriptions today and a very strong/unique competitive moat, Apple acquiring Peloton would be both an offensive and defensive acquisition in our opinion."
On the defensive side, a purchase by Amazon or Nike would give either company a "major foothold into the living rooms of consumers globally," with massive potential for cross-selling services. To Apple, such a purchase would be "a business model risk for its healthcare segment and future endeavors."
As an offensive purchase, Apple could use its Fitness and Apple Watch strategy to "leverage the Peloton services and flywheel to significantly bulk up its healthcare initiatives," a field Apple has consistently worked on.
Wedbush highlights that Apple doesn't seem to be an obvious candidate for acquiring Peloton, as it has largely avoided major acquisitions outside of its $3.2 billion Beats purchase in 2014, but it's still possible. With an expected sale price of between $12 billion and $15 billion, this seems a high figure for Apple to willingly pay, though it does have over $200 billion in available cash resources.
"We believe Peloton is a unique asset that would fit well into Apple's golden consumer ecosystem which makes us believe Cupertino could be a real bidder for this asset," the analysts conclude. "Apple may be forced into this deal if Amazon, Nike, or potentially Disney aggressively goes after Peloton in a defensive blocking strategic move."
Wedbush currently has a $200 12-month price target for Apple, with the iPhone maker designated with an "Outperform" rating.
Read on AppleInsider
Comments
IF Apple were to buy them, the current 2.6 subscriber content should be added to Fitness+. If any of those subscribers just had one other Apple subscription like Apple Music, then Apple One would be a “no brainer” upgrade. Now, Peloton equipment/content is part of Fitness+ and would create a halo effect with Fitness+/Apple users meaning more equipment being purchased.
Now that Apple has a fitness brand they can enter gyms and expand GymKit.
Imagine being able to enter your local gym and half or all the equipment is Fitness+ compatible. Instead of spending $1k for a stationary bike you could use various Fitness+ equipment at your local gym.
This would also be a talent acquisition with the engineers, fitness trainers Peloton has on their service and more.
I’m not saying Apple should buy Peloton, I’m just asking to think outside the box. The possibilities are there.
What does Peloton have to offer?!?!!
Almost everything!! This acquisition adds more than the Beats acquisition.
Apple already had earbuds and music services before they acquired Beats. Peloton has fitness equipment! None of which Apple has!
The obvious answer is No and No.
Peloton only makes sense for Apple at fire sale prices. Certainly not at $12-15 billion. No dead end business is worth that.
But yes - it’s the active lifestyle market that IS Apples most important connection and Peloton has a small piece at that table. Their talent and extensive classes are very valuable. And remember didn’t Peloton buy the gym equipment company as well? Name? Precor.
Read my above reply. It wouldn’t have to be an “expensive subscription”. It could be added to Fitness+ at $9.99 and encourage Apple One upgrades. In the long run Apple’s services would explode on the fitness end.
If Apple can encourage GymKit adoption via Peloton then. They will make their $12 billion back in Watch sales and subscriptions. They can slowly take Garmin’s entire market share.
Again, I’m not sure it’s the best acquisition but you have to look at it deeper than Apple buying a bunch of bikes.
Just because it's overpriced doesn't mean Apple, who some think produces overpriced computers, would be good fit to buy Peloton.
or maybe the analysts need a boost!
The only part Apple doesn't interface yet is the weights and I'm sure a modified airtag would fix that.
Apple could enable the disrupter into a bunch of disrupters all competing using their own branding and paying Apple a reliable trickle of dollars to tie it together. Makes the next up-sell item an easy one as people get more serious.
So what do they really have to offer?