Adam Glanzman | Bloomberg | Getty Images Peloton is increasing its monthly charge for custom fitness content for the first time, while also lowering the prices of Bike, Bike + and Tread machines in an effort to reach new customers under CEO Barry McCarthy. McCarthy, who has been at the helm of the company for just over two months, is set to announce the sweeping changes internally on Thursday. It comes as Peloton tries to reverse the recent sharp drop in its share price. Peloton shares initially jumped on the news before stopping shortly after 11 a.m. due to trading instability. Shares returned slightly higher but recently fell about 4%. McCarthy, a former Netflix and Spotify executive, was candid in recent press interviews about what he saw as an opportunity for Peloton to cut hardware costs. This, in theory, would reduce the barrier of entry for a consumer and then the company could focus its focus on increasing monthly recurring revenue. “The price changes announced today are part of CEO Barry McCarthy’s vision for the development of the Peloton community,” a company spokesman told CNBC. From June 1, the price of the Peloton all-access subscription program in the United States will rise to $ 44 per month, from $ 39. In Canada, the charge will increase to $ 55 per month, from $ 49. Prices for international members will remain unchanged, Peloton said. The cost of a digital-only subscription for people who do not own any Peloton equipment will still be $ 12.99 per month. Peloton explained the decision in a post on the company’s blog shared with CNBC. “There is a cost to creating great content and an engaging platform,” the company said. Price increases will allow Peloton to continue providing to users, he added. Meanwhile, from Thursday at 6 p.m. ET, Peloton will reduce the prices of its connected exercise bikes and treadmills in the hope of making its products more accessible to a wider audience and increasing its market share due to increased demand due to the pandemic.
The price of his bike will drop to $ 1,445 from $ 1,745. The cost includes $ 250 shipping and installation costs. Bike + will drop to $ 1,995 from $ 2,495. The Tread Machine will sell for $ 2,695, up from $ 2,845. The cost of the tread includes shipping and installation costs $ 350.
Peloton is also testing a rental option in select US markets, where users can pay a monthly fee of between $ 60 and $ 100 for a rental bike and access to the workout content library. The company said it recently expanded testing to additional markets and added Bike + as another rental option. As of December 31, Peloton had 2.77 million online fitness subscribers. It has more than 6.6 million members in total, including those who only pay for access to its training courses. The company has already shown a tendency to make its material more accessible, especially as McCarthy pushes the subscription model. Earlier this month, it launched its strongest new product, Peloton Guide, for $ 295. That’s $ 200 less than Peloton said last November that the device, packaged in a heart rate arm, would sell.
Peloton under pressure
In recent weeks, the Peloton stock has been trading below $ 29, where it was priced in its initial public offering in 2019, bringing it back to pre-pandemic levels. Shares have fallen nearly 35% since the day McCarthy was announced as CEO. McCarthy took over as CEO in early February from Peloton founder John Foley, who now serves as executive chairman. At the time, Peloton also announced plans to cut about 2,800 jobs in all of its operations and cut hundreds of thousands of dollars in annual costs as part of a massive restructuring and operational restoration. However, there are concerns that McCarthy, who says he is still working closely with Foley, is not doing enough to return to profitability. On Wednesday, Blackwells Capital activist reiterated her call on Peloton to consider selling the company, arguing in a presentation that the company’s shareholders are in a worse position now than before McCarthy took over. Peloton did not comment. However, what Blackwells and other analysts can agree on is that Peloton has established a loyal subscriber base that has invested in the company’s training equipment and continues to pay a monthly fee for the content that accompanies it. The average net monthly linked fitness reversal in the last quarter was 0.79%. The lower the rollover rate, the better news for Peloton. As of December 31, Peloton Online Fitness subscribers also did an average of 15.5 workouts each month. Peloton continues to develop new types of courses, from yoga to meditation and kickboxing, in an effort to offer its members more for their money.
