Peloton CEO Says Apple Fitness+ Legitimizes Exercise Market

Peloton Interactive Inc PTON CEO John Foley was on CNBC Wednesday to discuss Apple’s AAPL entry into the home fitness market.

What Happened: Apple announced a subscription service, Apple Fitness+, at its annual September product event on Tuesday.

Apple Watch users will be able to access workout videos from 10 categories and stream them to an iPhone, iPad or Apple TV.

Apple said its videos work with any brand of equipment, and some videos don’t require equipment at all. The service is set to cost $9.99 a month or $79.99 per year.

Foley On Peloton's 'Special Sauce': A Peloton All-Access Membership costs $39 per month. Peloton’s library of content is geared exclusively to its bike and treadmill equipment.

“The biggest thing I will say is it’s quite a legitimization of fitness content,” Foley said of Apple's entry.

A company of Apple’s size joining the sector shows that fitness content matters if “it’s meaningful enough for Apple.”

“They’re not coming into that [hardware] category,” Foley said when asked about the competition from Apple.

Peloton’s connected platforms are “the special sauce,” the CEO said.

“In order to work out at home, you need a stationary bike if you’re going to be biking. You need a treadmill if you’re going to be running.”

More Fitness Competition Ahead: Online fitness platform developer Zwift raised $450 million in a recent funding round led by KKR & Co Inc KKR.

The company was valued at over $1 billion and will use the money to improve its platform and work on hardware.

Outside magazine describes Zwift as “part social-media platform, part personal trainer, part computer game.”

The company’s users can use a smart trainer bike or their own treadmill to bike or run through 3D virtual runs on their own or against other users.

Since 2015, over 2.5 million people have signed up for Zwift. Over 117,000 people completed a virtual Tour de France in July with Zwift.

Benzinga’s Take: While Foley said he's unconcerned about Apple because Cupertino is not getting into hardware, Zwift may be the company to watch. 

Zwift is working on developing hardware, which could include bikes or treadmills with built-in Zwift app platforms.

Peloton shares are up 191% in 2020 as one of the biggest stay-at-home stockplays. The company has new products coming and is growing international expansion to help push it to a goal of 100 million subscribers.

The entry by Apple with an attractive price and the ability to use different workout products is something to watch going forward. We'd expect more color and questions about this on Peloton’s next earnings call.

PTON Price Action: Shares of Peloton were trading 1.5% higher at $83.83 at last check Thursday. 

The shares have fallen 9% over the last five days and both days since Apple announced its fitness subscription product.

Photo courtesy of Peloton.