What the heck is Peloton doing?

The fitness pioneer is making some big changes to right the ship.

When Peloton reported earnings last week, it wasn’t exactly pretty.

What the heck is Peloton doing?

The connected fitness pioneer reported a loss of $1.2B, a drop in revenue and membership, and higher-than-expected churn.

But CEO Barry McCarthy is optimistic, likening Peloton to a 720-foot cargo ship in the process of making a sharp turn at 27 knots.

So what’s his plan?

Reining in the balance sheet, for starters. Think: layoffs, store closures, and outsourcing manufacturing.

Aside from that, it appears he’s embracing two strategic bets:

  • Increasing accessibility to Peloton by offering a bike rental program for $89/mo., adding new subscription tiers to the Peloton app, and making Peloton content usable with third-party equipment.
  • Cutting costs elsewhere by outsourcing, including a bike with an Ikea-style self-assembly option, and opening up its distribution channels through a partnership with Amazon.

Remember, McCarthy hails from Netflix and Spotify. By sacrificing white glove service and focusing on subscription revenue, he hopes to cut costs and get Peloton’s best asset — its content — in front of more people.

Despite ugly financials…

… there’ve been some bright spots. One Peloton Club, the bike rental program, is on the upswing; subscription revenue actually surpassed hardware revenue; and McCarthy expects to reach break-even cash flow in 2023.

Peloton is also planning to release a rower in time for the holidays. Hopefully, this time, they don’t screw up the marketing campaign.

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