Why it suddenly makes sense for Apple to buy Peloton<div id="link_wrapped_content">
<body><section class="wp-block-bigbite-multi-title"><div class="container"></div></section><p>On Thursday afternoon, <a href="
http://Got%20a%20guess%20of%20how%20much%20Apple%20made%20last%20quarter?%20It's%20more%20than%20that.%20https://www.macworld.com/article/609346/apple-shrugs-off-supply-chain-woes-with-record-124b-quarter.html" data-type="URL" data-id="Got a guess of how much Apple made last quarter? It's more than that.
https://www.macworld.com/article/609346/apple-shrugs-off-supply-chain-woes-with-record-124b-quarter.html">Apple announced an astounding $123.9 billion revenue[/url] for the first quarter of its fiscal year 2022 (the period ending December 31). Nearly every category and geographic segment set records and the iPhone grew to a staggering $71.6 billion, more than some full quarters.</p>
<p>On the other end of the spectrum, Peloton announced last week it was <a href="
https://go.redirectingat.com/?id=111346X1569486&url=https://www.cnbc.com/2022/01/20/peloton-to-pause-production-of-its-bikes-treadmills-as-demand-wanes.html&xcust=1-1-608948-1-0-0&sref=https://www.macworld.com/feed" rel="nofollow">suspending production of its iconic bikes[/url] as demand for the pricey piece of exercise equipment waned. The company’s stock took a tumble as a result and analysts naturally began speculating about Peloton’s future, including possible suitors.</p>
<div class="extendedBlock-wrapper block-coreImage undefined"><figure class="wp-block-image size-large"><img loading="lazy" src="
https://b2c-contenthub.com/wp-content/uploads/2022/01/peloton-bike.jpg?quality=50&strip=all&w=1200" alt="Peloton Bike" class="wp-image-608950" srcset="
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https://b2c-contenthub.com/wp-content/uploads/2022/01/peloton-bike.jpg?resize=1536%2C1024&quality=50&strip=all 1536w,
https://b2c-contenthub.com/wp-content/uploads/2022/01/peloton-bike.jpg?resize=2048%2C1365&quality=50&strip=all 2048w,
https://b2c-contenthub.com/wp-content/uploads/2022/01/peloton-bike.jpg?resize=1240%2C826&quality=50&strip=all 1240w,
https://b2c-contenthub.com/wp-content/uploads/2022/01/peloton-bike.jpg?resize=150%2C100&quality=50&strip=all 150w" width="1200" height="800" sizes="(max-width: 1200px) 100vw, 1200px" /><figcaption><p>With a giant tablet and slick design, the Peloton Bike may as well be made by Apple.</p></figcaption></figure><p class="imageCredit">Peloton</p></div>
<p>As you’d expect, Apple’s name came up. It’s not the first time Apple’s name has come up as a potential buyer for a high-profile company, and usually, it’s just bluster. Analysts over the years have suggested Apple buy Netflix, Disney, Tesla, Spotify, and Activision to name a few, and none of them ever seemed right. Splashy? Yes. A good fit? Not so much.</p>
<p>But the prospect of buying Peloton in 2022 is different. For a number of reasons, it might be a perfect time for Apple to make an offer for Peloton and bring the exercise company under its tent.</p>
<h2 id="beats-for-fitness">Beats for Fitness+</h2>
<p>When
Apple bought Beats in 2014, it was to fill a need. Apple needed to dive into the music subscription business headfirst and Beats was a ready-made service tied to a popular line of headphones—so popular that Apple still makes Beats headphones alongside its own AirPods.</p>
<p>With Peloton, Apple already has the service. Apple launched Fitness+ over a year ago with a bit of acclaim, but it doesn’t seem to have generated much buzz. It’s a fine service with solid instructors and excellent Apple Watch integration, but its main fault is that it doesn’t tie directly into any equipment.</p>
<div class="extendedBlock-wrapper block-coreImage undefined"><figure class="wp-block-image size-full"><img loading="lazy" src="
https://images.idgesg.net/images/idge/imported/imageapi/2021/11/02/09/beats-fit-pro-100909552-orig.jpg?quality=50&strip=all&auto=webp&quality=85,70" alt="Beats Fit Pro" class="wp-image-568911" width="2400" height="1600" sizes="(max-width: 2400px) 100vw, 2400px" /><figcaption>Beats is as much of a lifestyle sub-brand as Beats is.</figcaption></figure></div>
<p>The most popular fitness services—Tonal, Tempo, NordicTrack, and of course Peloton—are all built around pricey equipment that works as a motivator for staying subscribed. Fitness+ might gain a small following, but it won’t have that “it” factor until Apple buys a company that has a built-in ecosystem and Peloton’s would fit right in. </p>
<p>Like Beats, Apple wouldn’t need to change anything about Peloton. The name is well-known, the equipment is high-end even without an Apple logo, and its die-hard community likely owns more than a few Apple devices. Peloton’s newest bikes even play nice with Apple Watch, thanks to GymKit. Just put Peloton’s gear up for sale on Apple.com and they’re set (though the Android-based OS might have to go).</p>
<p>With a line of luxury equipment and popular instructors, Apple Fitness+ with Peloton would instantly jump to the front of the fitness pack. Peloton bikes already support GymKit for Apple Watch metrics and the Fitness+ integration would only bolster the integration between the two devices. Apple has already established itself as a leader in the wearable health market, but a line of exercise equipment would solidify its role as a health and well-being promoter.</p>
<h2 id="show-me-the-money">Show me the money</h2>
<p>Even with massive dividends and buybacks, Apple had $203 billion in cash and $80 billion in net cash (minus debt) at the close of last quarter, a figure that grew at a substantial margin since the prior quarter. That’s too much for Apple.</p>
<p>Apple has said it plans to become “approximately <a href="
https://go.redirectingat.com/?id=111346X1569486&url=https://seekingalpha.com/article/4467898-apple-the-truth-about-cash-neutral&xcust=1-1-608948-1-0-0&sref=https://www.macworld.com/feed" data-type="URL" data-id="
https://seekingalpha.com/article/4467898-apple-the-truth-about-cash-neutral" rel="nofollow">net cash neutral[/url] over time,” which in layman terms means it needs to spend more than it has over the next several years. With its latest stock dip, Peloton is valued at around $10 billion, which would put a nice dent in Apple’s war chest. Sure, $10 billion is a lot of money, more than Apple has ever spent on an acquisition (as far as we know) and far more than the $2 billion Google paid for Fitbit. But it would be a sound investment.</p>
<p>So while Apple likely won’t announce a Peloton acquisition during Thursday’s earnings call, I’d be very surprised if it isn’t at least considering it.</p>
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Why it suddenly makes sense for Apple to buy Peloton
