Why Nike, Apple, Amazon, or Equinox should buy Peloton
Peloton is no longer riding high. The fitness company’s stock was pummeled after news broke last week that it would temporarily halt production as demand softened for its stationary bikes. Peloton shares closed just above $27 on Friday, a far cry from a high of $163 in December 2020.
The culprit? Easing covid-19 restrictions have prompted a partial return to in-person fitness classes, forcing the one-time pandemic darling to seek out McKinsey to help restructure.
Still, with an affluent and cult-like fan base–the company counted 2.49 million subscribers at the end of December–Peloton could make a valuable acquisition. Not to mention, the exercise-bike maker has never been cheaper than it is now. We run through some of the likeliest suitors for the brand.
Apple is the most floated name, not least because Tim Cook sees health and wellness as his company’s largest legacy.
Apple has been exploring ways to get into the digital health space, including with the launch of Fitness+, a subscription service that tracks workout activity via the Apple Watch. While Apple’s strength lies in its ecosystem, it is thus far hardware light–in that sense, the Peloton bike could be a key addition. The $2.7 trillion tech behemoth could easily pocket Peloton, now with a market cap of $12 billion, in an all-cash deal.
“Most importantly, buying Peloton would give Apple another avenue to attract more consumer attention and collect more data on a daily basis…Paying $12 billion to acquire and control the 30 to 60 minutes a day that people exercise seems like a smart financial decision,” pointed out Neil Patel for The Motley Fool.
Investor and NYU professor Scott Galloway has been predicting a Peloton sale since at least 2020. While he was initially betting on Apple, he now thinks Nike is the most natural purchaser given Peloton’s current more digestible size.
“It’s no longer a bet-the-ranch acquisition for a firm like Nike,” Galloway explained in his newsletter’s annual predictions. “Peloton’s incredible shedding of market capitalization makes it an even more attractive target.”
He believes Peloton will not end the year as an independent company.
Could Jeff Bezos scoop up the fitness player? Anthony Vennare, founder of Fitt Insider, a site that tracks the health and wellness sector, argues yes.
“Amazon is investing in content, and Peloton is a content company. As Amazon pushes Alexa and voice, Peloton’s equipment would be another screen/device in the house,” Vennare wrote in a post.
Peloton’s base could boost Amazon’s sales of activewear and nutritional supplements, as well as at Whole Foods, Vennare adds. For instance, the grocery store could give Peloton riders rewards for completing fitness classes.
A classic example of a legacy business acquiring a digitally savvy upstart, Equinox buying Peloton could prove to be a logical acquisition. Equinox’s current business–which includes gyms, hotels, various boutique workouts, and SoulCycle–is heavily exposed to the vagaries of covid-19 lockdowns and no fitness brand can ignore the value of an at-home offering.
Starting last year, Equinox ventured into those waters with its own competitor fitness bike, the SoulCycle At-Home. Like Peloton, SoulCycle built its business on charismatic instructors, although it’s recently lost some of its luster. Investing into Peloton could help Equinox remain a dominant force in the future of fitness.