Peloton Looking for Investor Like Apple to Buy 20% of Company

Peloton is looking for a major company like Apple or Amazon to buy a stake of around 20 percent in its business in an effort to improve the company's fortunes amid dwindling demand for its products and fierce competition from services like Apple Fitness+, according to a report from Bloomberg.

peloton tv workout cardio
Sources believed to be familiar with the matter speaking to Bloomberg's Mark Gurman and Ed Hammond claim that Peloton is seeking a big-name corporation or private equity firm that could help to validate Peloton's business in a show of confidence with a significant investment. The company is reportedly already contacting potential buyers, but the process remains at an early stage.

Following months of bleak news about Peloton's "precarious state" as demand for the company's products has dried up, including the revelation that it had halted production of its bikes and treadmills, Apple was floated as a potential buyer of the troubled fitness business at the start of this year.

In January, it emerged that Peloton was temporarily stopping production of its connected fitness products for up to six months due to a "significant reduction" in consumer demand, a pressing need to control costs, and amplified competitor activity. As a business, Peloton has high customer acquisition costs, translating to high product pricing. Toward the end of last year, the company reduced the price of its entry-level bike by almost 20 percent to $1,495 in an attempt to drive up sales through the end of 2021. It then emerged that the company was planning to lay off 41 percent of its sales and marketing staff.

The company's fiscal forecasts did not take into account new delivery and setup fees between $250 and $350 that customers had to pay on top of the cost of the Bike or Tread. In addition, Peloton saw low email capture rates for its $495 strength training product, "Peloton Guide," and has struggled to rekindle momentum after heightened interest in its products during lockdowns in 2020 stalled. There are also indications that Peloton is losing market share in the connected fitness industry.

Peloton CEO John Foley said that the company is "taking significant corrective actions to improve our profitability outlook and optimize our costs." The Information reported that Peloton's production halt and the precarious state of its business looks like a prelude to an acquisition by a bigger company, positing that Apple is the ideal candidate to buy Peloton:

If Peloton is to have a future, it would be better off as part of a bigger, more diversified company. Apple is an ideal candidate to take on that project. It has the Fitness+ subscription service for classes and it markets the Apple Watch as a device that can help with jogging and other exercise activities. It could close Peloton's stores and sell the equipment through its own stores. And hey, after today, Peloton's market capitalization is down to $7.9 billion. Cook could pay for that by dipping into the change jar in his kitchen.

The idea of Apple acquiring Peloton then gathered steam among some market observers, with the possibility being weighed up by The Motley Fool, Inc., and more. Even so, Apple has expressed no interest in acquiring Peloton or buying a stake in the company.

It is highly unlikely that a company like Apple could acquire Peloton's entire business by aggressive means since Peloton co-founder John Foley is part of a group that controls the company with super-voting stock, while CEO Barry McCarthy has said that this sort of deal is not his wish.

Currently, Peloton's main goal appears to be to obtain a single, significant investment from a well-known backer, rather than be acquired in its entirety. Receiving a major new supporter like Apple or Amazon could help to calm panicked investors, but the news that the company was seeking further investment caused Peloton shares to fall further this week. The stock is already down around 80 percent over the past year.

Apple may also be disinterested in any stake in Peloton due to possessing its own connected fitness brand, Apple Fitness+. Analyst Neil Cybart previously highlighted how Peloton is actively threatened by Apple Fitness+, not least because it is considerably cheaper, costing up to $388.01 less annually for digital classes alone. Cybart cautioned that without major changes in 2022, "Peloton is on track to be a Fitbit 2.0 - a company unable to compete with the giants subsidizing health and fitness tracking as an ecosystem feature." Peloton will report its latest quarterly earnings next week.

Popular Stories

ios 18 button bulge

iOS 18 Adds Pop-Out Bezel Animation When Pressing iPhone Buttons

Tuesday June 11, 2024 10:40 am PDT by
iOS 18 includes a small but interesting change for the buttons on the iPhone, adding more of a visual element when changing volume, activating the Action button, or locking the screen. When you press an iPhone button in iOS 18, the display bezel bulges outward slightly. This feature is available for the volume buttons, Action button and the power button, and it will also likely be used for...
iOS 18 Mock iPhone 16 Feature Gray

Revealed: iOS 18 Works With These iPhone Models

Monday June 10, 2024 3:57 am PDT by
iOS 18 will be compatible with the same iPhone models as iOS 17, according to a post on X today from a private account with a proven track record of sharing build numbers for upcoming iOS updates. iOS 18 will be compatible with the iPhone XR, and hence also the iPhone XS and iPhone XS Max models with the same A12 Bionic chip, but older iPhone models will miss out. Here is the full...
Next Gen CarPlay WWDC24 1

Apple Provides Updated Look at Next-Generation CarPlay at WWDC 2024

Monday June 10, 2024 7:11 pm PDT by
Apple today shared a few WWDC 2024 coding sessions related to its upcoming next-generation CarPlay system ahead of its launch later this year. The sessions include lots of updated next-generation CarPlay images, with one revealing new Vehicle, Media, and Climate apps in action for the first time. MacRumors previously discovered evidence of these apps in the iOS 17.4 beta. Next-generation...
ios 18 tile summary

Apple Announces iOS 18 With New Customization Features, Redesigned Photos App, and More

Monday June 10, 2024 10:17 am PDT by
Apple today previewed iOS 18, the next major update to the operating system for the iPhone, with new customization features, a redesigned Photos app, and more. iOS 18 features new customization tools for the Home Screen. App icons now feature Dark Mode and users can tint them with a color to create a unique look. Apps can also now be placed anywhere on the Home Screen freely. The Control...

macOS Sequoia and iPadOS 18 Drop Support for These Macs and iPads

Monday June 10, 2024 4:13 pm PDT by
macOS Sequoia is still compatible with several Intel-based Macs, but it does drop support for 2018 and 2019 models of the MacBook Air. macOS Sequoia is compatible with the following Macs, according to Apple: MacBook Pro: 2018 and later MacBook Air: 2020 and later Mac mini: 2018 and later iMac: 2019 and later iMac Pro: 2017 Mac Studio: 2022 and later Mac Pro: 2019 and later The...

Everything Apple Announced at WWDC 2024 in Nine Minutes

Monday June 10, 2024 7:59 pm PDT by
Apple crammed an overwhelming number of new features into its WWDC 2024 keynote event, introducing Apple Intelligence, iOS 18, iPadOS 18, macOS Sequoia, visionOS 2, watchOS 11, and tvOS 18. It was hard to keep up with everything that Apple highlighted, so we did a video of all of the new additions you won't want to miss. Subscribe to the MacRumors YouTube channel for more videos. We've also...
iOS 18 Siri Integrated Feature

Massive iPhone Upgrade Coming This Week But These Devices Will Miss Out

Sunday June 9, 2024 1:25 pm PDT by
Apple is planning a major AI overhaul in iOS 18, with a feature set it is referring to as "Apple Intelligence." However, these new features will not work on older iPhones, even if they do appear on the new operating system's device compatibility list. Apple's initial AI roadmap for iOS 18 is said to come in two parts: Basic AI features that will be processed on-device, and more advanced...

Top Rated Comments

GLS Avatar
28 months ago

I bought a bike 4 months ago. In my adulthood, it is, without a doubt, the single most important thing exercise wise I've ever done for myself. Nothing appealed to me. But after months of research, reading reviews, watching videos, etc I jumped in, ordered a bike right after Christmas, received it...and I've done 150 classes since. I've also lost almost 20 lbs, feel better, well, you get the idea.

And now, it's highly possible the company is not long for this Earth. Their content blows away Apple fitness, their bike is high quality (can't speak of their treadmill, since I don't have one), and their interactive features are well designed and engineered. They literally have the entire package, right now, today.

But their stupid ass founder literally set piles of money on fire and now, they have nothing to show for it other than a gloomy future.
Score: 18 Votes (Like | Disagree)
BootsWalking Avatar
28 months ago
Will be cheaper for Apple to wait and buy them after the inevitable bankruptcy.
Score: 17 Votes (Like | Disagree)
Doomtomb Avatar
28 months ago
Good luck with that
Score: 13 Votes (Like | Disagree)
Sciomar Avatar
28 months ago

Apple has invested in companies before without totally buying them out. Examples include Acorn Computer (now ARM), Akamai, and a $150M investment in Samsung in 1997 to bring down the cost of LCD panels.
The different is those were smart business moves, it is not smart investing in a company like Peloton.
Score: 9 Votes (Like | Disagree)
zubikov Avatar
28 months ago
Translation: give us your money, and your untarnished brand, and we'll maybe give you a board seat but give up no control.

Lol, no!

How about this...the CEO can keep buying houses in the Hamptons while throwing parties only for models and trainers, while the rest of the company stays alienated and lost. This way you'll bleed out all the cash and equity, and Apple, Amazon, Google or someone else can just buy you for pennies on the dollar.
Score: 8 Votes (Like | Disagree)
Sciomar Avatar
28 months ago
The company with one of the most unsustainable business plans is looking for outside investors to help it try to stay afloat. Ha! Apple should offer a low bid to buy it out, gut the company, and add the product to its fitness lineup.
Score: 7 Votes (Like | Disagree)