February 7, 2022
Amazon and Apple reportedly are among a group of possible suitors for Peloton Interactive, whose stationary exercise bikes dominated the market during the pandemic but has seen a slowdown in sales since.
The Wall Street Journal, citing sources familiar with the situation, said Amazon, along with Nike, has been kicking Peloton’s tires as the company’s stock tumbled in recent weeks below its 2019 initial price offering at $29 per share. An activist stockholder has called for the manufacturer to be sold.
Peloton, which generates the bulk of its recurring revenue through subscription-based on-demand fitness videos streamed to users’ bikes, is working with its own advisors, according to the Journal. The company, which was once valued at $50 billion, is now hovering around $8 billion in market capitalization.
Specifically, observers contend Peloton would be a good fit for Amazon and its Prime Video streaming service. Not only could the streaming platform deliver exercise video to Peloton users, it could also deliver movies and TV shows to the 1.4 million branded stationary bike owners. Amazon last year acquired the MGM movie studio, with the $8.45 billion transaction expected to close this year.
Amazon has made no official comment on the scuttlebutt.
But Daniel Ives, analyst with Wedbush Securities, has, arguing Peloton would also be a great fit for Apple or Disney as both companies are heavily invested in streaming video.
“For Cook & Co, acquiring Peloton would be a major strategic coup and catalyze the company’s aggressive health and fitness initiatives over the coming years,” Ives wrote in a Feb. 7 note. “With 2.8 million paid subscriptions today and a very strong/unique competitive moat, Apple TV+ acquiring Peloton would be both an offensive and defensive acquisition in our opinion.”
Apple’s SVOD subscriber base pales in comparison to Netflix’s 220 million, Amazon’s 175 million, Disney’s 111 million — or even NBCUniversal’s 9 million paid Peacock subs.
The analyst reiterated that other than the $3 billion acquisition of Beats wireless stereo headphones in 2014, Apple has been reluctant to enter into the merger & acquisition market. A Peloton deal could cost from $12 billion to $15 billion, according to Ives.
“Apple through its Fitness+ subscription service and Apple Watch strategy, would be able to leverage the Peloton services and flywheel to significantly bulk up its healthcare initiatives, which have been a key strategic linchpin for Cook.”
Apple has made no public comment on the situation.