The monthly fee for its on-demand fitness content is going to be hiked for the first time ever, while the prices of its bikes, bikes+ and Tread machines are going to be slashed.
McCarthy, who has been at the helm of the company for a little over two months, is set to announce the sweeping changes internally Thursday. It comes as the company tries to recover from a recent decline in its share price.
After jumping on the news, the shares were halted for trading volatility. The shares were down 4% recently.
McCarthy has been candid in recent interviews about what he sees as an opportunity at Peloton to cut hardware costs. The company could pivot its focus to growing monthly recurring revenues if the barrier to entry was lowered.
The pricing changes being announced today are part of CEO Barry McCarthy's vision to grow the community, a company spokesman told CNBC.
The price of the all-access subscription plan in the US will go up to $44 per month on June 1. The fee will go up to $55 per month in Canada. Pricing for international members will not change. The cost of a digital-only membership for people who don't own any of the equipment will still be $12 a month.
The company explained the decision in a post. The price increases will allow Peloton to continue to deliver.
Beginning Thursday at 6 p.m. The price of its connected-fitness bikes and treadmills will be slashed in order to increase its market share and make its products more affordable to a wider audience.
In the U.S., Peloton is testing a rental option where users can pay a monthly fee between $60 and $100 for a bike and access to its workout content library. The company said it has added the Bike+ as a rental option.
There were over 2 million connected fitness subscribers at the end of the year. People who only pay for access to its workout classes make up more than 6 million of its total members.
McCarthy pushes the subscription model and the company has already shown a penchant for making its hardware more affordable. It began selling its new strength product, Peloton Guide, for $295. That's $200 less than what the company said the device would retail for.
In recent weeks, the stock price of Peloton has been below the initial public offering price of $29, which puts it back to pre-pandemic levels. McCarthy was announced as CEO the day before.
McCarthy took over in February from John Foley, who is now the executive chairman.
At the time, Peloton announced plans to cut about 2,800 jobs and eliminate hundreds of thousands of dollars in annual expenses as part of a massive restructuring and operational reset.
McCarthy says he still works with Foley, but there are concerns that he isn't doing enough to get back to profitability.
In a presentation on Wednesday, activist Blackwells Capital argued that shareholders in the business are worse off now than they were before McCarthy took over. The person didn't comment.
The loyal base of subscribers who have invested in the company's workout equipment and continue to pay the monthly fee for content to go along with it is what the analysts agree on. The average net monthly connected fitness Churn was 0.79%. The lower the rate, the better.
The average number of workouts per month for the connected fitness subscribers was 15.5.
In order to give its members more for their money, Peloton continues to roll out new types of classes, from yoga to meditation to kickboxing.
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