Apple, not Amazon, should buy Peloton. An analyst explains why.

The acquisition of Peloton (ticker: PTON) “would be a major strategic move” for Apple (AAPL) and would “catalyze the company’s aggressive health and fitness initiatives over the next several years,” wrote Ives.

“With approximately 2.8 million paid subscriptions today and a very strong/unique competitive moat, Apple’s acquisition of Peloton would be both an offensive and defensive acquisition in our view,” the analyst added.

The Wall Street Journal was first to report last week that Peloton was attracting interest from potential suitors, including Amazon (AMZN). The Financial Times reported on Friday that Nike (NKE) was also evaluating a bid for Peloton, the interactive exercise company.

Peloton stock, which has fallen 83% in the past 12 months, jumped 26.4% to $31.10 in after-hours trading on Friday. In 2020, amid growing demand for Peloton bikes during shutdowns, the stock soared above $160. But shares fell as gyms reopened. It has fallen by 31% since the start of the year.

Last month, activist investor Blackwells Capital said it sent a letter to Peloton’s board suggesting the company fire CEO John Foley and explore a sale.

Ives isn’t the first to suggest that Apple might give Peloton a run, given the tech giant’s push towards fitness. Apple was one of the companies suggested by Blackwells, as were Walt Disney (DIS), Nike and Sony (SONY).

Ives wrote on Sunday that Apple – through its Fitness+ subscription service and Apple Watch strategy – “would be able to leverage the Peloton and Flywheel services to significantly bolster its health initiatives that have been a key strategic pivot for [CEO Tim] To cook.”

An acquisition of Peloton would also prevent another company from “getting their hands on Peloton,” which Ives said for Apple “would pose a business model risk to its healthcare segment and future plans.”

Write to Joe Woelfel at [email protected]