Investment firm Deepwater Asset Management has released their 2024 predictions, and one prediction in particular is garnering a lot of attention both within and outside of the Peloton community.
Deepwater Asset Management predicts that Apple will acquire Peloton in 2024.
Deepwater published their annual list of predictions for the upcoming year on December 27, 2023. Sixth on the list was a prediction that Apple will buy Peloton:
Apple will acquire Peloton. Apple will look to bolster their workout segment in 2024 by adding fitness equipment to compliment the Watch and fitness tracking software. Peloton has a loyal subscriber base of about 3 million users that will add about $1.7B to Apple’s subscription revenue, additionally this fits well into Apple’s continued investment in health and wellness.
This prediction is stimulating conversation in part because of the accuracy of Deepwater’s 2023 predictions. Of eight predictions made about 2023, seven came to fruition in some regard.
However, longtime Apple watchers and insiders have already expressed doubts and disagreements about Deepwater’s prediction that Apple would be interested in acquiring Peloton. William Gallagher, Apple historian and the senior editor of AppleInsider, writes:
​​The value of Peloton rose over the coronavirus pandemic, only to fall back again, while blaming Apple’s iOS 14 App Tracking Transparency for its earning almost $1 billion less than expected in 2021. Although figures vary and are only estimates, it’s likely that it would cost Apple at least $9 billion to acquire Peloton, and likely more.
While Apple regularly buys companies, $9 billion would be three times more than Apple has ever spent on any single acquisition.
You can read more details about Gallgher’s pushback to Deepwater’s prediction via AppleInsider.
Talks of Peloton potentially being acquired have died down somewhat over time. They reached a high in 2022 when founder and former CEO John Foley stepped down.
Around that same time activist investor Blackwells Capital published numerous open letters calling for the company to explore a sale. In addition, there were reports that companies such as Nike and Amazon were interested in acquiring Peloton. Current CEO Barry McCarthy, however, has remained consistent in stating that he is focused on long-term growth rather than a potential acquisition.
You can read the full list of 2024 predictions from Deepwater Asset Management via their website.
What do you think of the potential of Apple acquiring Peloton? Share your thoughts in the comments.
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I would hate for Apple to aquire Peloton. I’m not a fan of Apple own NO Apple products (never will) they have already RUINED Charlie Brown Christmas (and other CB specials) for people. I enjoy my Peloton those people getting their hands on it will just mess it up like they do everything they touch! Move on on!!
I love peloton (app subscriber only for years) and am avid Apple product user. I also subscribe to Apple One but Peloton>Fitness Plus. So I am totally onboard with this rumour, especially since I also own PTON shares.
There’s a lot of problems with a Peloton acquisition by Apple. We can consider things from multiple points of view: hardware, software, and services.
On the hardware front, Peloton bikes/treads/row all use Android systems. Apple of course has their own iOS, iPadOS, tvOS, etc. for their devices. Why would Apple want to take over all these machines when they could just make their own machines, attach a large tablet running a variant of iPad OS and control the whole thing? This would be like if they had bought Garmin or Polar to get a watch rather than making their own Apple Watch. Even the Peloton Guide isn’t of much use to Apple; the last tvOS update gave support for continuity camera so people can bring connect their iPhones to their Apple TV and use the phone’s camera in apps like FaceTime and Zoom. Apple would leverage this system to get their own rep tracking in Apple Fitness+ rather than rely on getting an additional camera taking up an HDMI port that could go to Apple TV.
On the software front, there’s the existing Fitness+ apps on iPhone, iPad, and Apple TV, that already have integration with the Apple Watch and show the activity rings on screen. The last update added support for Stacks and Custom Plans. Acquiring Peloton means there’s now two distinct apps doing the same thing. If Apple wanted Peloton for their app then they would have likely acquired it before developing and launching Fitness+ in 2020.
On the services front, Fitness+ fits inside Apple’s overall Apple One initiative combining all their services for $37.95, which gets you Apple Music, Arcade, TV+, News+ and more iCloud storage in addition to Fitness+ — meanwhile, Peloton All Access is $44/month. Does Apple raise the One cost to $50-$75 dollars with a Peloton acquisition? Does Apple just give Peloton users Apple One for free and reduce their prices?
The main thing to note on an Apple/Peloton acquisition is that it is highly unlikely Apple would have both Fitness+ and Peloton at the same time, so one would get folded into the other. Apple has already designed Fitness+ to what they want it to be, and there’s notable differences: no live classes and no leaderboard, for example. Instead, there’s a “burn bar” for cardio activities. It stands to reason Apple would collapse Peloton into Fitness+.
People bring up Beats as an example, but Apple closed the Beats Music service on 30 November 2015 after launching Apple Music on 30 June 2015. Their recent acquisition of the classical music app Primephonic closed that service on 7 September 2021 and they launched Apple Classical app in March 2023 — almost two years they left people without the service! The thought they’d buy Peloton and they not touch it at all is ridiculous. From simple things like getting rid of Spotify integration to more complex things like the look of the studio — Fitness+ has a very different look from Peloton studio, so the two don’t mix well in the same catalog — Apple would make tons of changes of it were to happen, and what do they get? They can do fitness hardware if they wish, or buy one of the companies they already use in Fitness+, like Schwinn for cycles, Technogym for treads, or LifeFitness for rowers. They already have the software and the service.
It is unlikely Apple will invest such sums of money into Peloton. Setting aside the cost of a potential purchase, the approach to classes is fundamentally different. I’ve used both and much prefer Peloton….but some people like Apple’s approach. Not sure how merging the two completely different approaches will work. Peloton has a strong brand and so do Apple. I think this is one company predicting but have very little facts to support this.