Gene Munster, managing partner at the Deepwater Asset Management Company, predicts that Apple will acquire Peloton in 2024. However the Sellers Research Group (that’s me) says this won’t happen.
He had this to say in Deepwater’s 2024 Predictions” mailed Wednesday to Deepwater Management subscribers: Apple will look to bolster their workout segment in 2024 by adding fitness equipment to compliment the Watch and fitness tracking software. Peloton has a loyal subscriber base of about 3 million users that will add about $1.7B to Apple’s subscription revenue, additionally this fits well into Apple’s continued investment in health and wellness.
This isn’t the first prediction that Apple wold acquire Peleton. The Information predicted in January that Apple will buy the financially troubled Peloton.
Peloton has long been rumored to be looking for a major company like Apple or Amazon to buy a stake of around 20% in its business in an effort to improve the company’s fortunes amid dwindling demand for its products and fierce competition from services like Apple Fitness+, according to a report from Bloomberg.
An The Information May 2022 article that said the temporary suspension (at the time) of Pelton’s bikes and treadmills “feels like the prelude to an acquisition of the troubled fitness equipment maker” and that “surely Apple must be the obvious buyer if it comes to that.”
Per The Information: If Peloton is to have a future, it would be better off as part of a bigger, more diversified company. Apple is an ideal candidate to take on that project. It has the Fitness+ subscription service for classes and it markets the Apple Watch as a device that can help with jogging and other exercise activities. It could close Peloton’s stores and sell the equipment through its own stores. And hey, after today, Peloton’s market capitalization is down to $7.9 billion. Cook could pay for that by dipping into the change jar in his kitchen.
Yes, Apple could certainly afford to buy Peleton. However, the company already makes computers, tablets, smartphones, smartwatches, smart speakers, accessories, and is apparently planning an AR/VR headset and an automobile.
I think the last thing the company needs is to add bikes, treadmills, and other fitness equipment to its repertoire. The company is already in danger of trying to compete in two many categories.
An acquisition of this company makes zero sense. Likely most people that want a Peloton machine already have one. Maybe apple would be interested in subscription business from existing users, but even that is limited.