Big Tech wants to buy Peloton. Here’s who should do it.

Peloton makes good hardware and immersive content, and it desperately needs help managing it all.

A Peloton

Lots of people own Peloton products. But who will own Peloton?

Photo: Peloton

More than one company is reportedly interested in buying Peloton. Is Peloton actually for sale? That’s not yet clear. But this much is: Peloton’s stock is down more than 80% over the last year, it has run into a series of problems with its products and it seems to be a company in disarray. It was a $50 billion company a couple of years ago, and its market cap has dropped to about $7.5 billion. And that’s after a big jump that came from the acquisition rumors.

Blackwells Capital, a large shareholder in Peloton, sent the company a scathing letter a couple of weeks ago detailing what the firm sees as Peloton’s major recent missteps. “With the stock now trading below the IPO price,” Blackwells wrote, “and down more than 80% from its high, it is clear that the Company, the executives and the Board have squandered this opportunity.”

Among the accusations levied at Peloton:

  • Bad leadership from CEO John Foley, who sold a lot of his shares in the company and seemingly couldn’t make up his mind about the company’s direction.
  • Mismanaging its supply chain, such that it ended up with products needing to be recalled and then a huge glut of inventory.
  • Overpaying for a huge New York City office.

Blackwells included a list of companies — Apple, Disney, Sony, Nike, plus “any number of technology, streaming, metaverse and sportswear companies” — that might be better stewards of Peloton than Peloton. And it gave the company a bit of a backhanded compliment: “Despite the incontrovertible mismanagement of the Company, Peloton has a large and loyal customer base, skilled employees, great technology and content, and a respected brand.”

Again, it’s not yet clear that Peloton is for sale. But it looks like Blackwells is going to get one of its primary demands: Foley is planning to step down, The Wall Street Journal reported, to be replaced by former Spotify and Netflix exec Barry McCarthy. Without Foley in the picture, a sale of the company could happen more easily.

Amazon and Nike are both reportedly interested, and Apple and others have been named as possible suitors as well. Each of those companies makes sense as a possible acquirer, though not always for the same reasons.

Here’s what Peloton could bring to some of its potential suitors, and what those companies might get for their billions. Let’s start with the three names seemingly on everyone’s mind.

If Amazon buys Peloton

What Amazon gets: A flagship product for its growing health ecosystem, which currently includes products like the Halo wristband and projects like Amazon Care, its telehealth system. Peloton is a longtime high-profile AWS customer, and could be a way for Amazon to show off more of its cloud-computing capabilities. Could a Peloton subscription be a benefit for Prime subscribers, even the ones who don’t own a bike or treadmill?

What Peloton gets: Access to Amazon’s unparalleled logistics network, which could make delivery and maintenance of those huge treadmills and bikes a lot easier. Lots of access to AWS, Alexa and other Amazon projects you could imagine Peloton might use. An owner with limitless resources and a solid reputation for helping its portfolio succeed.

Our take: Amazon stands to gain a lot here, including a huge stationary device and large screen in millions of homes that could run Alexa. It would also get a fitness brand, and provider of health data, that Halo isn’t likely to achieve anytime soon. The upsides are less enticing for Peloton, except that Amazon does have a good reputation for bringing companies in — like Ring and Eero — and helping them succeed.

If Apple buys Peloton

What Apple gets: Tight integration with Peloton instantly becomes a selling point for the Apple Watch and the Fitness+ platform. Lots of data for Apple Health and its other health initiatives. A new line of high-end hardware.

What Peloton gets: Bikes and treadmills in prominent places in one of the best retail ecosystems in the world. Access to the industry’s best supply chain, Apple’s impressive chip business and all the data-privacy features Apple’s been building in recent years.

Our take: This one’s probably better for Peloton than Apple. An Apple acquisition would give Peloton a boost in almost every way, but it’s not clear that Apple needs more access to high-end users or a quick bounce in subscriber numbers. And it definitely doesn’t need the branding win.

If Nike buys Peloton

What Nike gets: The kind of hardware prowess it has repeatedly tried and failed to build internally. (Remember the FuelBand?) Products that could make the Nike Training Club ecosystem more useful and powerful. Lots of captivated, wealthy customers to buy Nike-branded fitness gear.

What Peloton gets: Access to Nike-sponsored athletes, its legendary marketing machine and high-end fitness brand. Nike could help Peloton go from “bike company” to lifestyle brand, which it clearly wants to be.

Our take: This one makes the most sense for all sides. Nike needs a hardware player, especially as its competitors build out ecosystems like Lululemon did by buying Mirror and Apple launching Fitness+. And the overlap of “people who own Pelotons” and “people who buy expensive Nike gear” is practically a single circle.

What about the metaverse?

Blackwells’ ideas for possible Peloton suitors mostly make a certain amount of obvious sense. It’s fairly easy to imagine how any apparel maker, content company or general tech giant might make use of Peloton’s brand, content and technology.

But the mention of metaverse companies, and the inclusion of Disney and Sony as possible buyers, is an interesting one. You could make the case that Peloton is, in some ways, ahead of the metaverse curve: It uses a combination of hardware and software to build experiences that are both personalized and collaborative. Add a camera into the mix — like the one Peloton is already working on — and give users headsets, and every rider could be a digital avatar in a virtual Peloton studio.

Of course, “metaverse” is the buzziest of buzzwords right now, and Blackwells could be hoping for the company to get a bit of a metaverse boost. But Peloton is already an immersive content company, maybe even more than it is a maker of bikes and treadmills. And that could make it enticing to far more buyers going forward.

Does anybody need Peloton?

That’s the real question. Peloton may have been early to the connected fitness game, and remains the industry’s biggest name, but competitors are hitting it from all sides. Tonal, Hydrow and others are building their own in-home exercise systems, while Apple, Nike and others are building their own libraries of exercise content. Meanwhile, people are going back to the gym, and some gyms are investing in their own apps and at-home workout experiences. There’s not much about Peloton that is utterly unique anymore — unless you count Cody, anyway.

The question for Amazon, Apple, Nike and others will be whether they feel they can beat Peloton at its own game, or if it’s worth $10 billion or so to take a shortcut to the top of the market. If Peloton can turn its fortunes around, it might even have a chance to compete on its own. But it won’t have that chance for long.

Update: This story was updated to include Peloton CEO John Foley's plan to step down. Updated Feb. 8.


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