Peloton is looking for an investor like Apple to buy 20% of the company

Peloton is looking for a major like Apple or Amazon to buy a roughly 20 percent stake in its business in a bid 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.

He thinks the sources are familiar with the topic you spoke to BloombergMark Gorman and Ed Hammond claim that Peloton is looking for a big name company or private equity firm that can help validate Peloton’s business demonstrating confidence with a significant investment. The company is said to be already communicating with potential buyers, but the process is still at an early stage.

After months of dismal news about Peloton’s “precarious state” as demand for the company’s products dried up, including the revelation that it halted production of its bikes and treadmills, Apple was pitched as a potential buyer for the troubled fitness business at the start of this year.

In January, it emerged that Peloton had been temporarily halting production of related fitness products for up to six months due to a “significant drop” in consumer demand, an urgent need to control costs, and inflated competitor activity. As a business, Peloton incurs high customer acquisition costs, which translates to higher product prices. Towards the end of last year, the company slashed the price of its entry-level bike by nearly 20 percent to $1,495 in an effort to increase sales through the end of 2021. Then it turned out that the company was planning to lay off 41 percent of its sales and marketing staff.

The company’s financial projections did not take into account the new delivery and setup fees of $250 to $350 that customers had to pay in addition to the cost of the bike or tread. Additionally, Peloton has seen low email pickup rates for its $495 training product, Peloton’s Guide, and has struggled to revive momentum after growing interest in its products stalled during lockdowns in 2020. There are also indications that Peloton is losing market share. in the connected fitness industry.

John Foley, Peloton CEO, said the company is “taking important corrective actions to improve our profitability outlook and improve our costs.” the information You stated that Peloton is halting production and that the precarious state of its business appears to be a precursor to a larger company takeover, assuming Apple is the ideal candidate to buy Peloton:

If Peloton were to have a future, it would be better for it to be part of a larger and more diverse company. Apple is the perfect candidate to take on this project. It has a Fitness + Class subscription service and is marketing the Apple Watch as a device that can help with running and other exercise activities. It can close Peloton stores and sell equipment through its own stores. After today, Peloton’s market capitalization has fallen to $7.9 billion. The chef can pay for it by dipping it into the changing bowl in his kitchen.

Subsequently, the idea of ​​Apple acquiring Peloton gained traction among some market watchers, with assessments of the possibility Motley assholeAnd company, and more. However, Apple has not shown any interest in acquiring Peloton or buying a stake in the company.

It’s highly unlikely that a company like Apple could take over Peloton’s entire business by aggressive means because Peloton co-founder John Foley is part of a group that controls the company with super-voting shares, while CEO Barry McCarthy has said that kind of deal isn’t his desire.

At the moment, it appears that Peloton’s main goal is to get a single significant investment from a known backer, rather than get it all. Receiving a new major supporter like Apple or Amazon may help calm panicked investors, but news that the company is seeking more investment sent Peloton shares further down this week. The stock has already fallen about 80 percent over the past year.

Apple may also be uninterested in any stake in Peloton due to its own fitness brand, Apple Fitness+. Analyst Neil Seibert previously highlighted how Peloton is being actively threatened by Apple Fitness+, not least because it’s much cheaper, costing up to $388.01 less per year for digital classes alone. Without major changes in 2022, Seibart warned, “Peloton is on its way to becoming Fitbit 2.0 – a company unable to compete with the giants that support health and fitness tracking as an ecosystem advantage.” Peloton will announce its latest quarterly earnings next week.

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