Peloton raises subscription fees, lowers prices for bikes and processors

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

Adam Glanzmann | Bloomberg | Getty Images

peloton It is raising monthly fees for on-demand fitness content for the first time ever, while also lowering the prices of its bikes, bikes+ 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 is trying to reverse the recent sharp drop in its share price.

Peloton shares initially jumped on the news before being shut down shortly after 11 am due to trading volatility. Shares resumed a slight rally but were recently down about 4%.

ex McCarthy Netflix And spotify The executive, he’s been candid in recent press interviews about what he’s seeing Opportunity in Peloton to cut hardware costs. This, in theory, would lower the consumer’s barrier to entry, and then the company could focus its focus on increasing recurring monthly revenue.

“The price changes announced today are part of CEO Barry McCarthy’s vision for the development of the Peloton community,” a company spokesperson told CNBC.

Effective June 1, the price of Peloton’s Universal Access subscription plan will increase in the US to $44 per month, from $39. In Canada, the fee will rise to $55 a month, from $49. Peloton said prices for international members would remain unchanged. A digital membership only for people who don’t own any Peloton gear will still cost $12.99 a month.

Peloton explained the decision in a company blog post shared with CNBC. “There is a cost to creating exceptional content and an interactive platform,” the company said. It added that the price increases would allow Peloton to continue offering products to users.

Meanwhile, starting Thursday at 6 p.m. ET, Peloton will lower prices for fitness bikes and related treadmills in hopes of making its products more affordable to a wider audience and increasing market share as a result of increased demand due to the pandemic.

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

Peloton is also currently testing a rental option in select US markets, Users can pay a monthly fee of anywhere between $60 to $100 for a rental bike and for access to a library of workout content. The company said it recently expanded testing to additional markets and added Bike+ as another rental option.

As of December 31, Peloton counted 2.77 million connected fitness subscribers. It has over 6.6 million members, including people who only pay to access exercise classes.

The company has already shown a penchant for making its hardware more affordable, especially as McCarthy pushes the subscription model. Earlier this month, it began selling its new powerful product, the Peloton Guide, for $295. That’s less than $200 Peloton said last November that the bombbundled with heart rate badge, retail.

Peloton under pressure

In recent weeks, Peloton stock has been trading at less than $29, as it was priced at its initial public offering in 2019, which also brought it back to pre-pandemic levels. Shares are down nearly 35% since the day McCarthy was announced as CEO.

McCarthy Took in early February As CEO from Peloton founder, John Foley, who is now CEO.

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

However, there are concerns that McCarthy, who says he still works closely with FoleyNot doing enough to return to profitability.

Wednesday, Activist Blackwells Capital has reiterated its call to Peloton to consider selling the company, arguing in a presentation that the company’s shareholders are now worse off than they were before McCarthy took office. Peloton did not comment.

What Blackwells and other analysts can agree on, however, is that Peloton has built a loyal subscriber base who have invested in the company’s training equipment and continue to pay monthly fees for content that goes along with it. The average connected net monthly fitness rate in the most recent quarter was 0.79%. The lower the rate of change, the better the news for Peloton.

As of December 31, the average connected fitness subscribers at Peloton were 15.5 workouts each month.

Peloton continues to roll out new types of classes, from yoga to meditation to kickboxing, in an effort to give its members more for their money.

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