What happened
Shares of Peloton Interactive (PTON 0.66%) spiked today after the company announced that it was raising prices for some of its workout equipment and after Bloomberg reported that the company is also laying off some of its staff.
Peloton's stock was up by 14.6% as of 3:12 p.m. ET.
So what
Peloton said on its website today that it's hiking the prices of some of its hardware, including its Peloton Bike+ and Peloton Tread. The cost of the Peloton Bike+ is jumping by $500 to $2,495 while the price of its Peloton Tread will surge $800 to $3,495.
Image source: Peloton.
These price increases are for sales in the U.S., but the company is also increasing prices in Canada, the United Kingdom, Germany, and Australia.
Bloomberg also reported today that Peloton's management sent a memo to its employees saying it's cutting about 780 jobs and closing many of its retail stores beginning in 2023.
Some of the job cuts will reportedly come from Peloton shutting down its last-mile delivery services and warehouses. It will instead rely on third-party delivery networks.
"The shift of our final mile delivery to [third-party logistics] will reduce our per-product delivery costs by up to 50% and will enable us to meet our delivery commitments in the most cost-efficient way possible," Peloton's CEO Barry McCarthy said in the memo to employees.
Now what
Peloton shareholders welcomed these changes as the company is trying to work toward profitably.
McCarthy continued:
These are hard choices because we are impacting people's lives. These changes are essential if Peloton is ever going to become cash flow positive. Cash is oxygen. Oxygen is life. We simply must become self-sustaining on a cash flow basis.
With these announcements, Peloton investors will no doubt be keeping an even closer eye on the company's upcoming fourth-quarter and full-year results on Aug 25.
