At-home workout company Peloton Interactive Inc. (PTON) is changing its pricing strategy in an attempt to restore the company’s bottom line after more than two years of share value losses. Peloton reduced the price of some of its products and increased subscription costs.
Peloton’s latest side-step surprised shareholders, who moved so quickly on the news the Nasdaq Exchange temporarily halted trading for PTON stock on April 14. Here’s what the Peloton price changes could mean for the struggling stay-at-home stock that’s down more than 85 percent since December 2020.
Peloton cut the price of its Bike and other products, but added a new subscription fee.
Peloton’s latest attempt at reviving its bottom line comes in the form of price changes across the board. The company is reducing the cost of its products, including the Bike, Bike+, and Tread machines. The Bike will cost $300 less (for a new total of $1,445 including shipping and setup), the Bike+ will cost $500 less (or $1,995), and the Tread will cost $150 less (or $2,695). These price cuts are effective immediately.
Peloton hopes this will help onboard new clients, with more money coming in via the company’s new subscription fees, which will start on June 1.
“There’s a cost to creating exceptional content and an engaging platform,” a company spokesperson told reporters.
What do Peloton’s subscription price changes entail?
While Peloton reduced its equipment prices, consumers will see increased monthly subscription costs. Starting June 1, all-access subscription plans in the U.S. will cost $44 monthly, an increase of $5. In Canada, subscriptions are increasing by $6 to a new monthly rate of $55.
Who does the subscription price change impact?
Anyone using the Peloton all-access subscription plan in the U.S. and Canada will see a higher subscription cost. The change excludes international users and those with a digital-only membership (without Peloton equipment), which costs $12.99 per month
PTON shareholders react to the price changes.
Peloton stock was a stay-at-home favorite during the early days of the COVID-19 pandemic, but waning performance, leadership shifts, and activist investors pushing for a sale have all contributed to the stock’s approximately 85-percent decline since December 2020.
More recently, activist investor Blackwells Capital has been pushing for new CEO Barry McCarthy to sell the company. “Blackwells continues to believe that Peloton cannot be controlled by an executive chairman who appears to be under extreme duress, and will pursue all remedies available to it and to all shareholders,” the firm wrote.
The Nasdaq temporarily halted PTON stock on April 14 shortly after the news came out about Peloton’s price changes. Shares jumped as much as 5.75 percent before tumbling down again and losing the majority of the gains.
PTON stock may need more than price changes to recover.
After laying off thousands of employees, changing the cost of its products numerous times, and generally struggling to prove to shareholders it knows what it’s doing in the long run, Peloton may have something to learn. The company may need to resort to more drastic measures to convince investors to come on board—and stay there.