The peloton raises subscription fees, lowers the prices of bicycles, treads

A Peloton Interactive Inc. logo on a stationary bike in the company’s showroom in Dedham, Massachusetts, USA, on Wednesday, February 3, 2021.

Adam Glanzman | Bloomberg | Getty Images

The peloton is raising the monthly fee for its on-demand fitness content for the first time ever, while also lowering the prices of its Bike, Bike + and Tread machines in an effort to reach new customers under Chief Executive Barry McCarthy.

McCarthy, who has been in charge of the company for just over two months, will announce the extensive changes internally on Thursday. It happens as the Peloton tries to reverse a recent sharp drop in the stock price.

The CEO, a former Netflix and Spotify CEO, has been honest in recent press interviews about what he saw as an option at Peloton to reduce hardware costs. This would, in theory, lower the entry barrier 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 to grow the Peloton community,” a company spokesman told CNBC.

Peloton shares initially jumped on the news before being stopped shortly after noon. 11 due to trading volatility. The stock resumed slightly.

Effective June 1, the price of Peloton’s full-access subscription in the United States will go up to $ 44 per share. month, from $ 39. In Canada, the fee will increase to $ 55 per. month, from $ 49. Rates for international members will remain unchanged, the peloton said. The cost of a digital membership for people who do not own any of Peloton’s equipment will still be $ 12.99 a month.

The peloton explained the decision in a company blog post seen by CNBC. “There is a cost to creating exceptional content and an engaging platform,” the company said. The price increases will allow Peloton to continue delivering to users, it added.

Meanwhile, from Thursday at 18.00 ET, Peloton will lower the prices of its connected fitness bikes and treadmills in hopes of making its products more affordable for a wider audience and increasing its market share as a result of a pandemic-driven increase in demand.

  • The price of its bike will drop to $ 1,445 from $ 1,745. The price includes a shipping and setup fee of $ 250.
  • Bike + will drop to $ 1,995 from $ 2,495.
  • The tread machine will sell for $ 2,695, down from $ 2,845. The tread price includes a shipping and setup fee of $ 350.

Peloton is also currently testing a rental option in select US markets, where users can pay a monthly fee anywhere between $ 60 and $ 100 for a rented bike and for access to its training content library. The company said it recently expanded the test to additional markets and has added Bike + as another rental option.

Pr. On December 31, the Peloton counted 2.77 million connected fitness subscribers. It has more than 6.6 million members in total, including people who only pay for access to its training hours.

The company has already shown a penchant for making its hardware more affordable, especially as McCarthy pushes for the subscription model. Earlier this month, it began selling its new strength product, the Peloton Guide, for $ 295. That’s $ 200 less than what the Peloton said last November that the device, along with a wristband, would sell for.

Peloton under pressure

In recent weeks, Peloton’s stock has traded below $ 29, where it was priced at its listing in 2019, which also brought it back to pre-pandemic levels. Shares have fallen nearly 35% since the day McCarthy was announced as CEO.

McCarthy took over in early February as CEO from Peloton’s founder, John Foley, who now serves as CEO.

At the time, the Peloton also announced plans to cut about 2,800 jobs across its business and get rid of hundreds of thousands of dollars in annual expenses, as part of a massive restructuring and operational reset.

Still, there is concern that McCarthy, who says he still works closely with Foley, is not doing enough to get back to profitability.

On Wednesday, activist Blackwells Capital reiterated its call on the Peloton to consider a sale of the company, arguing in a presentation that shareholders in the company are worse off now than they were before McCarthy took over. The peloton did not comment.

This story is evolving. Please come back for updates.

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