Peloton is making more big changes to satisfy shareholders — and in the process potentially pissing off loyal customers.
Peloton, once a pandemic lockdown darling whose fortunes swiftly shifted once COVID-19 restrictions lifted, is significantly reducing the prices of its bikes and treadmill, the company announced Thursday, while also increasing the the price of its monthly all-access membership, which is required to unlock the classes on its Bike, Bike+ and Tread. For Peloton owners who bought their equipment at the original higher prices, the announcement will be tough to stomach.
The company's original Bike is now $1,195, down from $1,495, and the $2,495 Bike+ is now $1,995. The company's Tread (not to be confused with the outrageously expensive Tread+, which is still under a voluntary recall), is now $2,345, a $150 price drop. The All-Access subscription is now $44 a month, up from $39. The price increase goes into effect on June 1.
In an email to subscribers, Peloton justified the monthly price increase by pointing to the fact that the $39 price had stayed in place for eight years despite the company's content expansion. "We will continue to constantly add value to your membership, and this change will help us deliver even more exciting content, new features, and new products you’ll love," the email went on to say.
Peloton reported 2.77 million subscribers in its second-quarter earnings.
The company has watched its value plummet by more than 75% in the last year as pandemic restrictions eased and at-home exercisers returned to gyms. Peloton struggled to keep up with demand in the early days of COVID-19 and acquired gym equipment manufacturer Precor in April 2021 to increase supply. But now the company has a stockpile of extra bikes and treadmills that it needs to offload.
Peloton had previously twice reduced the price of its original Bike, from $2,245 to $1,895 when it launched the pricier Bike+ in late 2020, and then again from $1,895 to $1,495 after reporting dismal earnings in August 2021.
In February, CEO John Foley stepped down and former Spotify executive Barry McCarthy took the reins, promising to make changes that would restore Peloton's reputation as the connected fitness company to beat. Under McCarthy, Peloton is testing a monthly subscription service that bundles the price of its hardware and classes in one monthly fee. The company also launched a new product, a connected camera for guided strength workouts called Peloton Guide, this month. Guide was originally priced at $495 when announced, but Peloton slashed it to $295 ahead of launch.
Meanwhile, investor Blackwells Capital is still pushing the company to explore a sale, which McCarthy has been averse to. It's unclear who might still be interested in Peloton, although Amazon and Apple had been floated as potential buyers.