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Peloton Flips Its Business Model

Peloton is lowing the bar for entry into its exercise cult, cutting the price of its bikes with the aim of juicing larger subscription returns from its users.

Peloton’s original Bike is now $2,145, down $500 from $2,645, while the Bike+ is $700 cheaper, dropping to $2,995 from $3,695.

The company is hiking its subscriber fee in the US to US$44 from US$39 a month. A subscription is required in order to purchase either bike. Happily, for Australian users, the price will remain at $59 a month.

“We want more people to be able to afford our hardware,” the company said in a statement.

“This is a strategic decision to play for scale and increase market share.”

“There’s a cost to creating exceptional content and an engaging platform, and this price increase will help us continue to deliver for our members.”

“The price of hardware relative to the subscription is one of many levers by which we are looking to reduce barriers to entry.”

This announcement came the day after investor Blackwells made a presentation urging the company to be up for sale, criticising the continued involvement of ousted founder and ex-CEO John Foley.

“Peloton will continue to be poorly valued for as long as a close-knit group of insiders, who have proven themselves incapable of creating value, continue to wield voting power far in excess of their economic interest,” Blackwells Chief Investment Officer Jason Aintabi said.

“No shareholder should want Mr. Foley to still sit atop the management pyramid or control the board through his super voting-stock. He lost his entitlement to both positions when he destroyed $40 billion of shareholder wealth in less than a year.”

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