McCarthy admitted in the letter that the price increases represent a sharp shift in approach. This is due to McCarthy’s effectiveness in controlling the company’s inventory and supply chain issues. It has also acquired a $750 million bank loan, and the price increases are intended to promote the “luxury” image of Bike Plus and Tread.
The layoffs and price increases are also part of Peloton’s continuing attempts to improve its financial flow. McCarthy said in a shareholder letter last quarter that Peloton’s problems had left it “thinly financed” for its demands and that the firm needed to bolster its financial sheet. McCarthy stated in the email, “These modifications are critical if Peloton is ever to become cash flow positive.” “Money is oxygen. Life is oxygen. We just need to become self-sustaining in terms of cash flow.”
