Apple to buy Peloton? It’s no secret that Peloton is in trouble. The embattled fitness company has ceased production of its treadmills and bikes. As reported by CNBC the halt in production is due to a large reduction in customer demand and increased activity from competitors. Peloton revealed to employees in a confidential meeting that production will be halted for 6 weeks to 6 months.
John Foley, the CEO of Peloton states that the firm is taking several actions to try and curb costs and improve profitability. Problems that the company has faced include high customer acquisition costs. Its entry-level exercise bike for context comes in at a cool $1,500. And that’s on top of the costs for delivery, setup and annual membership fees. It’s no wonder the company is struggling when Apple offers services such as Apple Fitness+ for $10 per month (although an Apple Watch is also required it should be pointed out).
But what’s more interesting is that rumours are swirling that suggest Apple might be about to acquire them. A report from the information points towards just that.
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.The information
Apple is without doubt a huge competitor for Peloton right now. Apple’s huge scale means it is easily able to absorb the costs of establishing its Fitness+ service and the ongoing costs to run it. The attractiveness of Fitness+ is that it sits as part of a much larger ecosystem of services for Apple customers. And you can even have it bundled in with Apple One.
Peloton would be an intriguing acquisition. Perhaps their patents could prove useful for Apple in fleshing out its health business and improving the Apple Watch. Perhaps Apple would continue to sell Peloton products through its website but with deep integration with the Apple Watch. This is all hypothetical of course. But, notably, outlets such as The Motley Fool have chimed in on this as a possible acquisition too.