What happened
Shares of Peloton Interactive (PTON +6.51%) jumped 6.2% on Friday after its chief financial officer hinted that the home-based fitness equipment maker could soon debut a lower-cost version of its popular treadmill.
So what
During Barron's Investing in Tech conference call on Wednesday, Peloton CFO Jill Woodworth said the company was considering a lower-priced treadmill as its next product offering. "The only category that we have spoken explicitly about is our desire to have a lower-priced tread, or a tread that's priced more in line with our existing bike," Woodworth said.
Investors' excitement over a potential new treadmill product launch drove Peloton's stock higher on Friday. Image source: Peloton.
Peloton's existing internet-connected treadmill sells for a rather hefty $4,295. Its exercise bike, meanwhile, sells for a relatively cheaper $2,245. So, a new treadmill that's priced closer to that level would be much more affordable for fitness fans, which could help to bring more new customers and subscribers into Peloton's growing ecosystem.
Now what
Peloton has benefited as more people have chosen to work out at home during the COVID-19 crisis. The company has had to ramp up its production capabilities to satisfy the booming demand for its bikes and treadmills. But to expand its addressable market beyond just wealthier consumers, Peloton will likely need to offer more affordable options. Management knows this, and their apparent plans to move downmarket could help to drive its stock even higher in the weeks and months ahead.
