Changes are part of broader effort by new CEO to make company less reliant on hardware sales
Peloton bikes will start at $1,445 including a $250 shipping fee, down from $1,745 including shipping. (Photo: Reuters)
Peloton Interactive Inc. will cut prices of its stationary bikes and treadmills and raise monthly subscriptions for online workout classes.
The changes are part of an effort by Peloton’s new chief executive to create a company more focused on its digital business and less reliant on sales of connected exercise equipment.
Starting on June 1, Peloton equipment owners will pay $44 a month, up from $39, for access to metrics and subscriptions to live-streaming and on-demand classes that connect with their bikes and treadmills.
The $12.99 monthly fee to access courses that aren’t connected to equipment won’t change.
Meanwhile, it is dropping the price of bikes and treadmills. Peloton bikes will start at $1,445 including a $250 shipping fee, down from $1,745 including shipping. Treadmills will start at $2,695 including a $350 shipping fee, down from $2,845 including shipping.
“This is a strategic decision to play for scale and increase market share,” the company said on its website.
The move comes a day after activist investor Blackwells Capital reiterated its push for Peloton to consider a sale, saying in a presentation that the company has made little progress under CEO Barry McCarthy, who started in February.
Initially one of the breakout successes of the pandemic, Peloton has struggled as it ramped up production just as demand for at-home fitness products cooled.
The New York-based company has lowered its revenue forecasts for several quarters in a row and said it would cut about 20% of its corporate positions. Its market valuation has fallen from a high of around $50 billion to about $8 billion today.
Mr. McCarthy took over for founder John Foley, who had come under criticism from investors for betting that demand for Peloton’s products would endure and spending heavily to up production.
Mr. McCarthy, the former chief financial officer of Spotify Technology SA and Netflix Inc., said in an interview last month that subscription-based business models are more profitable than ones that rely on manufacturing as the main source of profit.
Mr. McCarthy said he thinks he can apply to Peloton some of the strategies that worked at Netflix and Spotify.