Apple Floated as Potential Buyer of Peloton

Apple is being mentioned as a potential buyer of Peloton's troubled fitness business, following the revelation that it has halted production of its bikes and treadmills.

According to CNBC, Peloton will temporarily stop production of its connected fitness products due to a significant reduction in consumer demand, a pressing need to control costs, and amplified competitor activity. In a presentation to employees earlier this month, Peloton told them that their products would be out of production for six to six months.

High customer acquisition costs translate to high product pricing. The company reduced the price of its entry-level bike by almost 20 percent at the end of last year in order to increase sales. The company plans to lay off 41 percent of its sales and marketing staff.

The company's fiscal forecasts do not take into account new delivery and setup fees between $250 and $350 that customers will have to pay on top of the cost of the bike or tread. The upcoming $495 strength training product, "Peloton Guide," has low email capture rates.

The company is taking significant corrective actions to improve its profitability outlook, according to the press release. The stock price of Peloton has plummeted since it went public, now floating around 85 percent below where it was last year, and even $5 less than when it went public. There are signs that Peloton is losing market share.

According to The Information, Apple is the ideal candidate to buy Peloton, as the company's production halt and precarious state of its business looks like a sign of an acquisition by a bigger company.

As part of a bigger, more diversified company, it would be better for Peloton to have a future. Apple is a good candidate to take on that project. The Apple Watch is a device that can help with jogging and other exercise activities, and it has a subscription service for classes. It could sell equipment through its own stores. After today, the market value of the company is $7.9 billion. Cook can pay for that by dipping into the change jar.

The idea of Apple acquiring Peloton is gaining steam among market watchers, with the possibility being weighed up by The Motley Fool and Inc.

Neil Cybart recently highlighted how Apple Fitness+ is cheaper than Peloton and is now threatening the company. "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," said Cybart.