- A potential acquisition of Peloton by Apple would make strategic sense for the iPhone maker, according to Wedbush.
- Peloton stock surged 31% on Monday following reports that the company is fielding interest from potential suitors like Amazon and Nike.
- "[Apple] acquiring Peloton would be a major strategic coup and catalyze the company's aggressive health and fitness initiatives over the coming years," Wedbush said.
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Peloton stock soared as much as 31% on Monday after reports suggested that the beaten-down connected fitness company could be acquired by Amazon or Nike.
But Wedbush analyst Dan Ives thinks Apple could swoop in and acquire Peloton, in what would be its largest acquisition ever.
In a Monday note, Ives argued that a Peloton acquisition by Apple would be both a defensive and offensive move as the iPhone maker seeks to jump further into the health and connected fitness industry.
"For [Apple], acquiring Peloton would be a major strategic coup and catalyze the company's aggressive health and fitness initiatives over the coming years," he said.
Peloton's nearly 3 million subscribers would give Amazon or Nike a leg-up in the health and fitness industry and box out Apple from a lucrative subscriber base. Additionally, an acquisition would allow whoever bought the company the opportunity to cross-sell different services into the Peloton ecosystem, Ives said.
"Apple through its Fitness+ subscription service and Apple Watch strategy would be able to leverage the Peloton services and flywheel to significantly bulk up its healthcare initiatives which have been a key strategic linchpin for Cook," he explained.
Peloton has seen a boom-and-bust cycle amid the COVID-19 pandemic, with its stock soaring to a valuation as high as $48 billion, before a series of product setbacks and decreased demand amid a reopened economy led its stock price to decline more than 80% from record highs.
Ives estimates that an acquisition of Peloton would be in the range of $12 billion to $15 billion. But Peloton is controlled by its founder and CEO John Foley, who has a majority of the voting shares of Peloton. Therefore, Foley needs to be on board for a deal to get done.
But given the synergies and growth potential of an Apple and Peloton tie-up, "we would be shocked if Apple is not aggressively involved in this potential deal process," Ives said.