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Peloton announces series of layoffs, closures, and price hikes

Yahoo Finance Live checks out Peloton's announcement regarding layoffs, store closures, and price hikes as it moves towards selling devices that customers can assemble themselves.

Video Transcript

DAVE BRIGGS: My play is Peloton, who has a new CEO. A company on its own streak of days in the headlines consecutive. First came news of nearly 800 layoffs and price increases as well. CEO Barry McCarthy saying it's all part of a plan to become more efficient, cost effective, and agile.

The company will hike prices by 500 bucks for its Bike+ to 2,495, push the incline button on the treadmill prices by $800 to 3,495. Now news today of a plan redesigned to allow customers to assemble their own bike at home after ordering one. Also reporting from Bloomberg that Peloton is exploring letting users stream Peloton content on rival workout machines.

The CEO, McCarthy, also announcing the company hopes to debut its new rowing machine in time for the holidays. That's a lot to take in if you got all that news. Expectations are the machine will cost around $2,000. As for shares, they are down more than 1% today and down 87% in the last 12 months. Their market cap, once more than $45 billion, is now below $4 billion. It's hard to imagine a recovery anywhere near those levels.

PRAS SUBRAMANIAN: The Peloton story is a little confusing for me because they cut prices, they're raising prices, now they want people to build the bikes in their homes.

DAVE BRIGGS: It's a fire hose of news, isn't it?

PRAS SUBRAMANIAN: Yeah, and it's a combination of, at least for me, the money is expensive, but it wasn't-- it's much more a space issue in the city, right? Where do I put this bike? And the ability to actually use that, now the app or use that technology in, let's say, your gym at another-- like, a cyber or whatever type of [INAUDIBLE]. Well, other companies' equipment to use that technology or app, I think is a good idea. But I'm just confused by the whole making the bikes at home and then cutting and then raising prices. Like, what, $3,000 for the Tread? I mean, that's a lot of money, in my opinion.

SEANA SMITH: It certainly is a lot of money. I'm a big Peloton believer. I will throw that out there. I love the bike. I use it all the time. I'm a big fan of the app. I think the classes are great. I think from a corporate standpoint, what we've seen play out over the last several months is also very confusing, going back to what we were just talking about with Bed, Bath & Beyond.

Now we do have a new CEO, Dave, like you noted, at the helm. So we need to give him a few more months to in order to straighten things out and figure things out. The building the bikes at home was a little bit confusing to me because I don't know. I mean, I guess it makes sense if you want to cut down on the labor costs there, just in terms of sending out the workers to assemble the bikes, but they're so delicate that-- I don't know. I guess, basically, I don't trust myself to assemble the bike. But anyways.

DAVE BRIGGS: Well, I put together a grill once, so certainly feel confident in putting together a Peloton. It's actually not that complex when you break it down to its four or five single elements. But how much cost does that cut for them? I thought that cost would be transferred onto the consumer, who pays for that to arrive. But there's a massive uphill plan for Barry McCarthy. But again, I agree with you. I love the bike. I love the app. I think the classes that go well beyond biking are the biggest underplayed asset they have. And they really need to push that forward.

PRAS SUBRAMANIAN: I agree on the classes. Also, I'd be scared to build those bikes. They're quite heavy. I don't know.

SEANA SMITH: Very heavy.

PRAS SUBRAMANIAN: I mean, I don't want to put one together.

SEANA SMITH: The screen alone is so heavy.

PRAS SUBRAMANIAN: Yeah, and the wheels, so.