Peloton is looking at a number of options to turn the company around.
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New Peloton Interactive CEO Barry McCarthy is testing subscription options in his efforts to turn around the fitness firm. A look at the stock suggests investors aren’t buying in just yet.
The company on Thursday unveiled One Peloton Club, a limited offering that promises its flagship bike as a subscription option, rather than an upfront purchase. The company said the offering will be available at physical locations in Texas, Florida, Minnesota, and Denver. If a customer wants to cancel, Peloton (ticker: PTON) takes back the bike, and the delivery fee is nonrefundable. A One Peloton Club member can later decide to buy the bike outright.
The Wall Street Journal first reported on the plan, adding that the limited offer will be between $60 and $100 a month for both the bike and subscription.
“Peloton has created a limited pilot program in select U.S. markets to explore various pricing models and options for new members,” Peloton said in an emailed statement to Barron’s.
Peloton stock is down 5% to $22.24 in Thursday afternoon trading, amid a decline in broader markets. The S&P 500 and Nasdaq Composite were down 1.3% and 2.0%, respectively. Shares of the connected fitness firm have fallen 38% in 2022 and shed 81% of their value from 12 months ago.
McCarthy replaced John Foley as CEO last month after the co-founder stepped aside into the role of executive chairman. McCarthy is tasked with turning around the company after its spending amid pandemic demand backfired. He told the Journal that Peloton plans to test new offerings and strategy, much like Netflix
(NFLX) has in the past. McCarthy was previously chief financial officer at both Netflix and Spotify Technology ( SPOT
).
Peloton is making a larger shift to emphasize its content and digital offerings. The Journal’s report refers to other options being considered, such as a social-media platform and partnerships to put Peloton classes on non-Peloton exercise equipment or allow outside content on Peloton’s bike tablet.
The stock sold off in January as it became clear the firm vastly overestimated demand amid the economic reopening. In late January, the company faced pressure from activist investor Blackwells Capital to pursue a sale. Apple (AAPL), Amazon.com (AMZN), and Nike (NKE) were among the firms floated as possible suitors. But McCarthy told the Journal that insiders who control 70% of Peloton voting shares agreed to put off discussions of selling the company while he attempts his turnaround plan.
Write to Connor Smith at [email protected]
