In late 2019, Peloton aired a Holiday commercial that garnered media backlash. In early 2020, it became a media darling as the COVID–19 pandemic shut down gyms, and people were forced to work out at home for many months. On 12/21/20, Peloton’s stock peaked at $162.72. Today, it sits at $38.51. That puts it just above its $23.01 price around the time when the WHO declared a pandemic. That’s quite a rise and fall for a company with devoted subscribers and continue low churn. With a market cap of just 15 billion, it will be a prime acquisition target in 2022. Who will the buyer be? Let’s look at the options.
Amazon
Amazon has dabbled with fitness with its lineup of Halo fitness trackers, but it has larger ambitions in this space. It also sells Echelon products and has the logistical infrastructure to continue with a direct sales model.
Apple
Apple Fitness has become a crucial part of the Apple Watch experience, and Tim Cook has gone on record with the impact Apple plans to make in the world of health. Like Amazon, Apple has the cash on hand to easily purchase Peloton outright. How would Apple Fitness and Peloton’s classes coexist alongside each other would be the biggest question.
Spotify
As Spotify expands its market from just a musical service, it needs a way to drive subscription revenue not controlled by licensed products. It also has a partnership with Peloton, and I’ve gone on record to say that I believe in the future – musical albums might debut on Peloton during live rides. Spotify doesn’t have much experience with shipping physical hardware, though. A purchase of Peloton would likely be Spotify’s largest acquisition to date as well.
Meta (Facebook)
With the Oculus 2 expansion, Meta has ambitions for fitness in the metaverse. I’ve long believed that AR/VR might be part of Peloton’s focus in the future as it expands into more aspects of fitness. Meta acquired Oculus back in 2014 for 2 billion, and it’s developed the functionality over time with new apps, hardware, and vision.
While Google has floundered somewhat with hardware, it does have Wear OS. In addition, Peloton’s software is running on top of Android. Could Google make a run at Peloton to make headway into the connected fitness market and expand the functionality of Wear OS?
Summary
Who will acquire Peloton? Will someone acquire Peloton? Peloton finished its last quarter with $805.2 million in revenue and 2.49 million total subscribers with a hardware product. If you include its digital-only subscribers, Peloton has 6.2 million subscribers. These numbers could be attractive to a lot of companies as part of a larger connected fitness strategy.
Peloton played a crucial role in fitness for 2020 and most of 2021, but the growth ahead seems limited. 2022 should be an exciting year for PTON.
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