Peloton Hikes Subscription Fees, Slashes Bike Price As Activist Urges Company To Sell

Peloton Hikes Subscription Fees, Slashes Bike Price As Activist Urges Company To Sell

Peloton Interactive Inc. shares pumped and dumped after the news the fitness company would slash prices of its three top hardware products while increasing costs for its monthly subscription, a move to generate more recurring revenue, according to Bloomberg. Meanwhile, activist investor Blackwells Capital stressed the company needs to push for a sale because it hasn’t done enough. 

Peloton’s higher-end Bike+ will be reduced by $500 to $1,995. The lower-end bike will be priced around $1,195 after a more than $300 discount, and the treadmill will now be $2,345, down $150. 

To offset the lower costs, the fitness company will hike the monthly subscription fee for the first time in eight years, from $39 per month to $44. 

Shares pumped and dumped on the news, now down 2.5% to around $24.74

This comes after Peloton’s executive change, mass layoff, and guidance downgrades earlier this year after pandemic-driven demand for its exercise equipment evaporated (sending the stock crashing). Peloton brought in a new CEO to embark on a turnaround plan in early February. 

But according to Blackwells, Peloton’s turnaround plan has done very little to fix the sinking ship. 

“Issues related to cost structure, capital allocation, inventory management and quality control continue to plague the company,” Blackwells said in a PowerPoint presentation on Wednesday. The investment firm owns a less than 5% stake in the fitness company and has been pushing for a sale. 

A statement from the company read, “We want more people to be able to afford our hardware … This is a strategic decision to play for scale and increase market share.”

Tyler Durden
Thu, 04/14/2022 – 11:23

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