Peloton stock falls 4.6% after wild ride

Posted: 14 April 2022 6:46 pm

The struggling exercise bike maker will raise subscription fees and cut prices for its Bike, Tread and Guide. What investors need to know.

Shares of Peloton Interactive (PTON) went on a wild ride Thursday after the company announced pricing changes for some of its products and services.
The stock opened at $24.82 Thursday and initially surged on the news before they were halted shortly after 11:00 a.m. for trading volatility. The stock closed the day down 4.6%.
That brings its loss for the last 12 months to 80%, as it tries to make changes to turn things around and keep both exercisers and investors.

What happened?

Peloton said Thursday via a blogpost that it will soon hike the price of its connected fitness programs.
Starting June 1, the price of Peloton’s All-Access membership plan in the US will go up to $49. It’s the first such price increase since the connected-fitness equipment maker first launched its monthly All-Access Membership for $39 eight years ago. In Canada, the fee will rise to $55 per month, from $49. Pricing for international members will remain unchanged, Peloton said.
“There’s a cost to creating exceptional content and an engaging platform,” the company said. The price increases will allow Peloton to continue to deliver to its members, it added.
In an email sent to Peloton members, the company phrased the price hike as a pricing “update” and reassured members that more value is to come.
“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 company said.

Meanwhile, Peloton will slash the cost of its Bike and Tread starting Thursday. The move comes as the company continues to struggle to add new hardware users under the leadership of Peloton’s new CEO Barry McCarthy. The company is hoping the price decreases attract a wider audience now that the pandemic-driven surge in demand has dried up.
“We’re lowering the price for our Bikes and Treads in all markets,” the company said. “We want more people to be able to afford our hardware. This is a strategic decision to play for scale and increase market share.” The Peloton Bike will drop from $1,495 to $1,195. A $250 shipping and set-up fee will also apply. The price of the upscaled Bike+ will fall $500 to $1,995. The Bike+ includes free delivery and setup.
The Tread machine will sell for $2,495, down from $2,645. The Tread cost also comes with a $350 shipping and set-up fee.
The price changes come just days after activist Blackwells Capital, which holds a 5% stake in Peloton, again pushed Peloton to reconsider a sale of the company, according to CNBC. The firm argued that Peloton has made scant progress since McCarthy took over in February and that “shareholders are worse off now than before.”

Now what?

Shares of Peloton are down 86% from their December 2020 high of $167.37 and 32% year to date. The stock is also trading below its 2019 IPO price of $29.
For more information and a 5-year view of the performance of this stock, see the graph in our dedicated guide. In February, Peloton CEO Barry McCarthy dismissed the idea of selling the company when speculation of a possible takeover began to spread, instead insisting that he pledged to pursue long-term growth when he took over the helm.
For now, the consensus on the Street gives Peloton stock a Hold. Of the 31 analysts covering the stock, 15 give it a Strong Buy or Buy, compared to 14 Holds and 2 Underperforms.
At the time of publication, Matt Miczulski owned shares of PTON.

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