Peloton just announced a massive rebrand to focus on its fitness application subscription service amid plummeting sales of its hardware.
The at-home fitness equipment maker was once a Wall Street darling as the Covid-19 pandemic and associated lockdowns drove massive demand for its workout bikes and treadmills.
However, the post-pandemic “reopening”, which saw people return to the gym/outdoor exercise, has seen Peloton’s hardware sales plummet and the company fall into sharp contraction.
Earlier this month, Peloton reported a bigger-than-expected loss of over $750 million for the first quarter of 2023, with revenue down 42% versus Q1 2022.
And there are plenty of other signs the company is facing significant financial stress.
In February, Peloton switched CEOs and laid off 20% of its workforce, amounting to around 2,800 jobs.
Meanwhile, the company announced earlier this month that, to help cover its losses, Peloton is raising $750 million via a five-year loan from major US banking powerhouses Goldman Sachs and JP Morgan.
“I think all of us were drunk on the growth that Covid brought, and no one paused to say like, hey, maybe this is a game of musical chairs, and what happens when the music stops?” a former Peloton employee told CNBC back in February.
Can Peloton’s Massive Rebrand Save the Company?
Peloton’s massive rebrand, which was announced on Tuesday, indicates the company has finally sobered up to face reality following the pandemic high.
The announcement said that Peloton plans to reposition itself “from the perception of an in-home bike company to reflect everything Peloton has to offer to everyone, at any level, wherever they are”.
At the centre of its drive to become a fitness company for all, Peloton overhauling its workout application.
The new app will include three monthly payment tiers; a free tier with 50 classes across 25 fitness categories, a middle tier (which already existed prior to the overhaul) which offers unlimited access to thousands of classes and costs $12.99, and a premium tier for $24.
The new workout app tiers are separate and not a substitute to the $44 per month fee that is required for Peloton bike owners if they want to partake in classes on their bike.
“With this brand relaunch we’re reflecting the vibrancy and fullness of everything Peloton has to offer to everyone,” Peloton’s chief marketing officer Leslie Berland said in a statement.
“We’re shifting perceptions from in-home to everywhere, fitness enthusiasts to people at all levels, exclusivity to inclusivity across all Peloton Members present and future”.
The company’s pivot to focusing on its mobile application is an obvious move, with revenue relating to application subscriptions the only income stream that has been growing recently.
Time will tell if Peloton’s mobile app is the “path to the promised land”, as the company’s CEO Barry McCarthy told investors earlier this year.
McCarthy was brought in last year to “save” Peloton.
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