With Peloton Down, Rumors of Apple Acquisition Abound

As work-from-home trends have slowed, stationary bicycle producer Peloton Interactive, Inc. (PTON) has been heading downhill at a steep decline. Now, with its valuation down over 84% from its 2020 pandemic-led peak, large tech conglomerates are rumored to be looking for an acquisition. The media buzz on the issue has pumped PTON’s stock up about 20-25% in the early hours of Monday, although nothing is certain yet.  

Currently, speculation is around a purchase coming from Nike (NKE), Amazon (AMZN), Disney (DIS), or Apple (AAPL). The latter of those has the most potential for a move, at least according to Daniel Ives of Wedbush Securities. He argued that absorbing Peloton’s 3 million-count subscriber base and its product offerings into Apple’s expanding health and fitness ecosystem would make logical sense.  

Ives went on to write that he “would be shocked if Apple is not aggressively involved in this potential deal process.” The five-starred financial analyst sees the possible deal as both defensive and offensive for Apple, meaning that it would both benefit it directly, as well as defend it from incursions of Nike or Amazon into the health front.  

Reiterating his position on Apple, Ives rated the stock a Buy, and offered a price target of $200 per share. This target currently represents a possible 12-month upside of 16.02%.  

Peloton has suffered not just from a deceleration in pandemic-fueled trends, but its management has also failed to execute properly on its pipeline, and fears of a lack of demand for its products have permeated investors for months. Ives suggests the additional possibility of activist investors in PTON currently pushing for a sale.  

Writing about the potential benefits to Apple, Ives noted that the $12-15 billion deal could “catalyze the company’s aggressive health and fitness initiatives over the coming years.” 

On TipRanks, AAPL has an analyst rating consensus of Strong Buy, based on 24 Buy and five Hold ratings. The average Apple price target is $192.18, indicating a potential 12-month upside of 11.48%. Apple closed trading Friday at a price of $172.39 per share.  

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