Apple (AAPL) – Get Apple Inc. Report is known for transforming the industries in which it bets big on.
So when the apple brand launched its Fitness+ service in 2020 to offer its subscribers, in particular owners of an Apple watch, hundreds of courses led by real coaches employed by Apple, there was no doubt that the Cupertino, Calif.-based company wanted to replace and become everyone’s sports coach.
In view of these stated ambitions, a takeover of Peloton (PTON) – Get Peloton Interactive, Inc. Class A Report could be logical to quickly achieve its objective. A kind of springboard, a bit like the takeover of Beats had propelled Apple Music and Tim Cook’s group into the music and hype sphere.
Apple is sitting on war chest of billions of dollars and indeed can get its hands on Peloton without breaking the bank. It would even be a pittance. Peloton had a market capitalization of a little bit over $11 billion as of time of writing.
But would Apple make an offer to buy Peloton?
To answer that question, it’s worth looking at what Peloton can offer Apple. The activity of the fitness group is rather simple to understand. It is divided into two: a part dedicated to consumer hardware and another to contents such as class subscriptions that allow customers to take an assortment of live and on-demand classes.
Peloton Struggled to Make Bikes, Now It Has a Sales Problem
Peloton sells at-home fitness equipment, such as exercise bikes and treadmills, which makes the company a web-connected devices firm.
If Peloton struggled to meet demand for bikes and treadmills at the height of the pandemic, the group is now struggling to sell them. The revenues generated by the hardware division have thus been in continuous decline over each quarter for at least a year. In the last quarter ended Dec. 31, these revenues decreased by 8.5% to $796.4 million.
On the other hand, the cost to manufacture these products increased by 32.5% over the period. Worse, the margins are very low, a bit like in the traditional automobile. Connected fitness product gross margin was 6.4% as of Dec. 31.
“Our Connected Fitness gross profit margin was primarily impacted …….