The Peloton story: everything you need to know

Just like all gadgets, even tablets solely devoted to fitness will eventually meet their software demise. That time is rapidly approaching for Peloton’s first-gen bike tablets, known as Quartz. Peloton sold these first-gen bikes between 2013 and 2016. The company already cut off software updates for the early touchscreens back in 2019. But now, as reported by Pelo Buddy, the hammer is coming down, and Peloton will completely cease support for the tablets in June 2024. If you don’t make a move by then, you won’t be able to access classes anymore, leaving “Just Workout” as the only feature that will still work.

So what’s a budget-conscious Peloton devotee to do? Well, there are a couple of options to choose from. Affected customers can take advantage of an exclusive $500 discount on the modern Bike Plus. If that’s way outside the scope of what you’re willing to pay, Peloton is also offering a much more modest $50 off a replacement 22-inch touchscreen tablet, which would bring that price to $325.

Peloton is opening up its app to third-party treadmills for running, walking, or Tread Bootcamp classes. Pelo Buddy spotted a new support page on Peloton’s site announcing that the app can now record and display metrics on any treadmill that uses Bluetooth FTMS. The offer is only open to subscribers of the company’s most expensive subscription workout plan, Peloton App Plus.

To pair, you’ll start a Tread class in the Peloton app, then tap the “Connect a Bluetooth Device” option. Pick your treadmill from the list, and a green check mark lets you know when it’s connected.

Many Peloton users were unable to get into Thursday’s Thanksgiving ride, prompting the company’s CEO to apologize. At 10AM ET Peloton kicked off its 10th annual “Turkey Burn” event, with the goal of breaking the Guiness World Record for “largest live cycling class.” But the company struggled with the demand, and many users were unable to participate at all. “We let you down,” CEO Barry McCarthy said in a statement.

According to McCarthy, over 37,000 people were able to participate, while it’s unclear how many couldn’t get in. “The number of members trying to join the ride overwhelmed our technical infrastructure and we were unable to support all those attempting to participate in the class,” he said. The Peloton status page notes “elevated errors with live classes” for about an hour starting just a few minutes after the class kicked off, and resolving at 11:07AM ET. Some users who got into the event also noted technical issues while it was live. At the time of writing everything seems to be operational.

Tom Cortese, Peloton co-founder and chief product officer, is stepping down from his role. In a press release shared on Tuesday, Peloton says it will replace Cortese with former Twitter executive Nick Caldwell.

“After nearly 12 years of pouring myself into Peloton and serving our Members, I have decided it is time to move on and create space for new perspectives,” Cortese says. “I’m eager for new growth for Peloton and for me personally, but I’m also excited to support and watch this next phase of Peloton’s evolution.”

In its latest earnings call, Peloton reported a net loss of $242 million for the quarter. It also lost 29,000 subscribers from last quarter and had a higher-than-anticipated monthly churn of 1.4 percent. While some of that was attributed to summer doldrums, Peloton noted that costs for a recent bike seat post-recall “substantially exceeded” initial expectations to the tune of $40 million. An estimated 15 to 20 thousand members also chose to pause their subscriptions ahead of receiving replacement seats.

But speaking of recalled products, Peloton CEO Barry McCarthy said in its quarterly shareholder letter that the company plans to resume US presales of the Tread Plus this holiday season for a retail price of around $6,000. (For context, the Tread Plus originally cost $4,295.) The Tread Plus was recalled in 2021 after several reports of injuries and the death of a small child. The treadmill was subsequently discontinued, but earlier this year, the company got regulatory approval for a new rear safety guard — which is likely why the company is entertaining bringing the premium treadmill back into its product lineup. The plan is to sell out the existing 10,000 units in inventory with the new rear guard before starting up any new manufacturing.

Peloton isn’t keen on the fact people mostly think of it as that bike company, which is why CEO Barry McCarthy says the company will “relaunch its brand” later this month so that more people are aware that it does other things, too. Part of that is relaunching the Peloton app with a new tiered subscription structure.

There’s no information on the pricing just yet, but on today’s Q3 2023 earnings call, CFO Liz Coddington said the “app tiers will have different amounts of content variances” depending on the price. Only users who have bought Peloton hardware and pay for All-Access membership will get everything Peloton has to offer.

Peloton is starting off 2023 with a $19 million fine. According to the US Consumer Product Safety Commission (CPSC), the company has agreed to pay the civil penalty to settle charges that the company knowingly failed to immediately report safety issues with its recalled Tread Plus. The fine will also resolve charges that Peloton continued to sell 38 Tread Plus units after the recall in violation of the Consumer Product Safety Act.

As a refresher, Peloton recalled both of its treadmills — the Tread and Tread Plus — in 2021. While the Tread’s issue was a wobbly screen, the more premium Tread Plus caused multiple reports of injuries and, in one instance, the death of a small child. Because of the Tread Plus’ slatted belt and raised deck, it was easier for children, adults, and pets to get pulled under the 455-pound device. Peloton has since discontinued the Tread Plus, implemented more safety features on its treadmills, and extended the refund period for recalled Tread Plus units.

The year 2021 wasn’t great for Peloton. Its stock tanked. Its premium treadmill killed a small child, injured several others, and wound up being recalled. Its new, affordable treadmill also ended up being recalled before it ever officially launched. By December, Peloton was the butt of everyone’s jokes after Mr. Big, a major Sex and the City character, died on his Peloton Bike in the first episode of HBO’s sequel And Just Like That…. Peloton tried to clap back with a cheeky commercial. That backfired. The year ended with murmurs about a potential sale.

And yet, somehow, 2022 was worse.

Peloton is now offering customers the option to assemble their bikes on their own. There are a couple of caveats, though. The option is only available for folks who buy the original Peloton Bike on Amazon, and it doesn’t come with any discounts.

We first heard rumors about self-assembly in August. Peloton confirmed it a few weeks later when it announced its partnership with Amazon. Previously, you had to set up a date and time for a white-glove delivery and allow people into your home for installation. According to a Peloton blog, the company decided to explore self-assembly after members said they wanted to be “involved in the set-up process.”

This morning’s news that Peloton is cutting 12 percent of its workforce doesn’t immediately read as a promising sign for the beleaguered smart fitness company.

But in a memo sent to employees on Thursday afternoon, CEO Barry McCarthy explains that he thought a background discussion with The Wall Street Journal ahead of announcing the cuts would lead to a headline about Peloton’s potential growth. He’s apparently surprised to learn that the report accentuated the negative and said the CEO “is giving the unprofitable company about another six months to significantly turn itself around and, if that fails, Peloton likely isn’t viable as a stand-alone company.”

Peloton’s numbers don’t look great. In its Q4 2022 earnings release this morning, the company reported a $1.2 billion operating loss, a 28 percent revenue drop, a membership decline, and a monthly subscriber churn exceeding 1 percent for the first time in a long while. (Perhaps ever?) And that’s just the tip of the iceberg. In a nutshell, losses were greater than both Peloton and investors had anticipated.

And yet, Peloton CEO Barry McCarthy would have you believe the numbers actually paint a picture of “substantial progress” and the true start of Peloton’s comeback story.

Peloton has announced it will completely out-source the production of its bikes and treadmills to Taiwanese manufacturer Rexon. The fitness company currently builds some of its hardware in-house, but says out-sourcing will allow it to reduce costs and simplify its supply chain.

It’s the latest move by recently-installed CEO Barry McCarthy to right Peloton’s troubled ship. As a fitness firm focused on delivering home workouts, the company was a natural pandemic darling. But founder and former CEO John Foley overestimated demand for its products, and saw sales, subscribers, and stock plunge as the company was left burdened with surplus inventory. Its most recent earnings showed losses of some $757 million.

Peloton announced in a press release today (via CNBC) that it plans to raise the cost of its all-access subscription for live and on-demand classes from $39 / month to $44 / month starting on June 1st, 2022. However, new, lower prices for Peloton’s exercise equipment are set to go into effect at 6PM ET today, according to CNBC — the Bike will cost $1,445 (including a $250 shipping fee) instead of $1,745, the Bike Plus will go for $1,995 instead of $2,495, while the Tread will drop to $2,695 (including a $350 shipping fee) from $2,845.

The change only applies to customers in the US and Canada and doesn’t affect the $12.99 / month app-only membership. As noted by CNBC, the subscription price in Canada will go from $49 CAD to $55 CAD, but there’s no word on how much the equipment will cost.

Barry McCarthy, Peloton’s new CEO, weighs an app store and new subscription model as potential ways to kickstart the company’s stagnant sales, as stated in an interview with the New York Times’ DealBook.

McCarthy, who served as the former chief financial officer of Spotify and Netflix, says his vision for Peloton may include an app store open to third-party content. “Today, it’s a closed platform — but it could be an open platform and part of the creator economy,” McCarthy tells the NYT. “What other apps would you put on it? Could it be running an app store?”

Things are a lot less rosy for Peloton these days. Once a pandemic darling, the connected fitness company has seen its stock price plunge in recent months. TV shows have turned its bike into a deadly punchline, and there’s been no shortage of rumors speculating which company should buy Peloton to save it from impending doom.

Then today, Peloton kicked off its Q2 earnings call with a flurry of news: the company has a new CEO. It’s eliminating 2,800 jobs globally, scaling back marketing, and putting the kibosh on its North American manufacturing ambitions. Altogether, it’s a grim picture that raises questions about whether Peloton can find a way out of this mess.

Peloton is replacing its CEO and losing about 2,800 jobs among other cost-cutting measures, according to a press release issued by the company. The job cuts amount to around 20 percent of the former pandemic darling’s corporate workforce, but will not affect the company’s lauded roster of instructors or fitness content. The news was first reported by the Wall Street Journal.

Peloton hopes the changes will boost profitability after waning demand for its connected fitness equipment have made it an acquisition target, with Amazon, Nike, and even Apple named as possible suitors. The company, once valued at $50 billion, plunged to around $8 billion last week before takeover rumors began to swirl.

Peloton’s pandemic fortunes began waning in 2021, and it appears that trend is continuing into the new year. According to a new CNBC report, Peloton has decided to temporarily halt production of its connected exercise bikes and treadmills amid weak consumer demand.

Citing a confidential internal company presentation, CNBC reports that Peloton will stop producing its original Bike from February to March. The company halted production on its more premium Bike Plus in December and apparently has no plans to restart until at least June. The newer Peloton Tread, which launched last year, will also cease production for six weeks starting next month. Unsurprisingly, Peloton also reportedly has no plans to produce any Tread Plus machines in fiscal 2022. The company stopped making new Tread Plus machines after the Consumer Product Safety Commission recalled the device following reports of several injuries, and in one instance, the death of a small child.

Peloton has responded to a plot-line in HBO Max’s new Sex and the City reboot, And Just Like That…, turning around a commercial in less than 48 hours after the company’s stock continued to plummet in reaction to events on the TV show over the weekend.

(Spoiler warning: the following discusses a major plot point from the first episode of And Just Like That…)

The punches keep coming for Peloton. Its treadmills were recalled after a series of injuries and a child’s death, people are returning to gyms, and now — spoiler alert — its stock is down 11 percent overnight after its iconic Bike was a key part of a major character’s death in the inaugural episode of And Just Like That…, HBO Max’s new Sex and the City reboot. However, Peloton is now saying its product isn’t to blame — it’s extravagant living.

Spoiler warning: the following discusses a major plot point from the first episode of And Just Like That…

Peloton is issuing a voluntary recall for all of its treadmill products — including both the Peloton Tread and Tread Plus — following a series of accidents that have resulted in multiple injuries and at least one death.

In the recall announcement today for the Tread Plus, the Consumer Product Safety Commission (CPSC) elaborates that it’s received “72 reports of adult users, children, pets and/or objects being pulled under the rear of the treadmill, including 29 reports of injuries to children such as second- and third-degree abrasions, broken bones, and lacerations.”

Congressional Democrats have introduced a bill that would make it easier for the Consumer Product Safety Commission to warn people about unsafe products, by repealing part of a 49-year-old law that limits what information the agency can release publicly.

The Sunshine in Product Safety Act (PDF) comes after reports that exercise machine company Peloton “obstructed CPSC’s investigation” into its Peloton Tread Plus treadmill, according to the members of Congress. The Tread Plus has been involved in some 39 accidents where children were injured, including one death.

The Consumer Product Safety Commission on Saturday issued a warning about Peloton Tread Plus treadmills, saying the machines pose “serious risks to children for abrasions, fractures, and death.” In a March blog post by CEO John Foley, the company said it was aware that a child had died in an accident on the treadmill.

The agency says it is aware of 39 incidents with the Tread Plus, including one death. “In light of multiple reports of children becoming entrapped, pinned, and pulled under the rear roller of the product, CPSC urges consumers with children at home to stop using the product immediately,” the CPSC bulletin states.