Securities firm Wedbush said recently that Apple’s next “major strategic change” may be the acquisition of Peloton, which will help drive Apple’s strategic deployment in the health and fitness market.
Peloton has emerged as a potential acquisition target for companies after reportedly halting production of spinning bikes and treadmills due to waning consumer interest.
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While Amazon is primarily interested in the fitness equipment company, securities firm Wedbush believes Apple may be interested in the company as well. In a note to investors, Wedbush analysts Daniel Ives and John Katsingris said Apple could easily be one of the potential acquirers of the fitness company.
“The acquisition of Peloton would be a significant strategic change for Apple and catalyze the company’s aggressive health and fitness initiatives over the next few years,” the memo read. “Peloton currently has 2.8 million paying subscribers and has a very strong/ With a unique competitive moat, Apple’s acquisition of Peloton would be an offensive and defensive acquisition in our view.”
On the defensive side, with a “significant foothold into the living room of consumers around the world”, it can withstand acquisitions by Amazon and Nike and has huge potential to cross-sell services. For Apple, such an acquisition would be “the business model for its healthcare division and future efforts.”
As an offensive acquisition, Apple could use its fitness and Apple Watch strategy to significantly increase its health care program with Peloton’s services and fitness equipment, an area Apple has been working on.
Wedbush stressed that Apple does not appear to be an obvious candidate to acquire Peloton, as it has avoided major acquisitions with the exception of its $3.2 billion purchase of Beats in 2014.
Peloton is expected to sell for between $12 billion and $15 billion. Although Apple currently has more than $200 billion in available cash resources, it does not mean that Apple is willing to pay such high money.
The analysts concluded: “We see Peloton as a unique asset that fits well into Apple’s golden consumer ecosystem, which leads us to believe that Apple could be a real bidder for this asset. If Amazon, Nike or potential Disney has aggressively pursued Peloton in a strategic move of a defensive blockade, and Apple may be forced into the deal.”