Deepwater Asset Management, a Minneapolis-based investment firm led by former tech analyst Gene Munster, made headlines last week with their bold 2024 predictions. Among the 13 prognostications, the standout forecast is the anticipated acquisition of Peloton (NASDAQ: PTON) by tech giant Apple (NASDAQ: AAPL).
What sets Deepwater Asset apart is its impressive track record, as 8.5 out of 10 predictions from the firm proved accurate last year. The prospect of Apple acquiring Peloton raises eyebrows, especially considering the potential impact on both companies.
According to the investment firm, Apple’s move to enhance its workout segment in 2024 involves integrating fitness equipment to complement the Apple Watch and existing fitness tracking software. With Peloton boasting a devoted subscriber base of approximately 3 million users, this acquisition could contribute around $1.7 billion to Apple’s subscription revenue, aligning seamlessly with Apple’s ongoing investments in health and wellness.
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Despite consistent speculation by analysts, the difference with Deepwater Asset lies in their recent success rate, making this prediction one to watch closely. The forecast raises critical questions about what Peloton could bring to Apple beyond its loyal user base.
Several years ago, industry observers, such as 9to5Mac, suggested that an Apple acquisition of Peloton could be valued between $12 billion and $15 billion, citing strategic synergy with Apple’s existing offerings, including the Apple Fitness+ subscription service and health tracking capabilities on the Apple Watch.
Peloton experienced a surge in sales during the peak of the pandemic as home workouts became the norm. However, the company struggled to sustain its value post-Covid, witnessing a 23% decline in shares in 2023 and a substantial 96% drop from its 2021 Covid-induced highs. Factors such as the return to offices and gyms, coupled with the Tread+’s recall, led to a continued decline in Peloton’s numbers throughout 2023.
The key question emerges: Would Apple consider acquiring a business that has struggled to show growth for nearly three years?
The potential acquisition raises uncertainties about the implications for Peloton subscribers. The synergy is evident with the Apple Watch, Fitness+ subscription, and Peloton’s extensive library of classes and content, yet the future remains uncertain.
Information for this briefing was found via Connect The Watts and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
