Peloton, an American exercise equipment and media company based in New York City is facing financial issues, and investors at Blackwells Capital blame the new CEO Barry McCarthy, and maintain that “shareholders are worse off now than before.” Therefore, the activist investors view Apple as a good contender to acquire Peloton because of the tech giants’ health-focused devices, features, and services, like Apple Watch, ECG app, Apple Fitness+, and others.
Previously, Peloton reported that Apple’s ‘App Tracking Transparency’ iOS privacy feature has adversely impacted its business growth by restricting its capability to run targetted ad campaigns to add new subscribers, especially to market the ‘Peloton Digital’ service to people who did not have Peloton hardware but could subscribe for classes.
Analyst Neil Cybart also reported that Peloton was struggling because Apple Fitness+ is viewed as an affordable home-workout service and predicted that Peloton would not be able to compete with Apple Fitness+. Investors at Blackwells Capital have taken into account Apple’s iOS health apps, Apple Watch health tracking metrics, and Fitness+ and deem it is one of the companies fit to acquire Peloton.
Investors at Blackwells Capital believe Peloton’s acquisition will allow Apple to lead the digital health and wellness industry
Based on Apple’s existing health and wellness functionality and features available on the iPhone and Apple Watch and Fitness+ service which include tracking heart rate, steps, calories, sleep, weight, 11 types of workouts, and more, investors believe that the acquisition of Peloton will place Apple as a global leader. Here are the benefits the investors listed for Apple:
Apple would position itself as the global leader in digital health & wellness
- Apple becomes the category leader in digital health & wellness
- Immediate ability to bundle with 100 million Apple watch users
- Gains significant customer data edge to use for applicability across the Apple ecosystem
- Through its preexisting health, wellness, content, and lifestyle segments, Apple has a robust opportunity to cross-sell and bundle content offerings such as:
- Apple Fitness+: Full integration of all Apple’s preexisting health features and classes
- Apple Music: Integrated apple music to create workout playlist and content (i.e., sort
music by BPM or workout time)
- Apple TV+: New exercise content combined with the ability to watch Apple TV+ content
- Leading brand and high quality of Peloton offering fits well with Apple’s ethos of premium products
- Strategically Defensive Asset: Prevents other big tech / health and wellnesscompetitors from gaining a trophy subscription fitness asset
In their report, investors also explore the acquisition of Peloton by Amazon, Google, Warner Bros, Netflix, and Nike and conclude that lack of good governance and management has depreciated the share price of the company, and the acquisition of the company is likely to boost its share price by amplifying the opportunities for additional value creation and acquiring millions of new subscribers.
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