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| Apple may acquire Peloton to boost healthcare plans |
According to Wedbush Securities, the acquisition of Peloton could be a major strategic move for Apple.
The acquisition could help boost the iPhone maker's transition into the health and fitness market.
During the pandemic, sales of Peloton bikes and treadmills have skyrocketed as people stay indoors. But demand slowed after the lockdown was lifted.
The company has faced a number of other challenges that have sent its stock price down in recent months.
Peloton was reportedly a takeover target after it halted production of bikes and treadmills due to waning consumer interest.
While the main concern is a potential Amazon takeover of the company, analysts have provided reasons for Apple's interest in acquiring the company.
In a note to investors, analysts Daniel Ives and John Katsingris write that Apple could easily be a potential buyer for the fitness company.
The Peloton acquisition could be a major strategic move for iPhone, motivating the company to aggressively pursue health and fitness initiatives in the coming years.
"Apple's acquisition of Peloton is both offensive and defensive, with 2.8 million paid subscriptions and the ability to maintain a competitive advantage," the report said.
Defensively, the acquisition of Amazon or Nike would give the two companies a place in the living rooms of consumers around the world, with huge potential for service sales.
Apple's acquisition of Peloton represents both offense and defense
For Apple, the acquisition could pose a risk to the healthcare business model and future efforts.
As an abusive purchase, Apple could use its fitness strategy and Apple Watch to take advantage of Peloton's services and dramatically increase health plans, an area in which the company operates.
Wedbush's memo indicates that Apple does not appear to be a clear candidate to acquire Peloton. In fact, the company has largely avoided any major acquisitions other than its 2014 acquisition of Beats. But that's still possible.
It is expected to sell for between $12 billion and $15 billion. Seems like a huge licensing fee to pay to Apple. And that's despite the fact that it has more than $200 billion in cash on hand.
Analysts conclude that Peloton represents a unique asset that fits within Apple's consumer ecosystem. This led them to believe that the company could be a true exhibitor of these assets.
The analyst added that the company could be forced into the deal if Amazon, Nike or Disney aggressively sought Peloton to thwart it in a defensive strategic move.