About W. Mccarthy
In a February 2022 appearance on CNBC's "Mad Money," newly appointed Peloton CEO Barry McCarthy discussed the company's pricing strategy and financial outlook. McCarthy stated that he was not focused on raising prices, but rather on "doing exactly the opposite" and exploring "how much price elasticity there is for the business." He described an "enormous opportunity" to "flex the business model" and "dramatically increase the TAM by lowering the cost of entry for new members," as well as "playing around" with the relationship between monthly recurring revenue and upfront revenue.
McCarthy also addressed the company's recent liquidity challenges, noting that Peloton's performance in the "COVID world" was "quite a bit different than the management team was expecting," which had "dramatic implications for liquidity." He stated that the company was "less good than they would have liked to have been at forecasting what the cash needs of the business were," and that "until we can prove that we are capable of forecasting the performance of the business and meeting those forecast expectations then there will continue to be some uncertainty." However, McCarthy added that from his perspective, the company appeared "pretty well capitalized for the challenge ahead, principally because of some of the pain that investors have already felt."
Source: AI-verified profile updated from W. Mccarthy's recent appearances.
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Transcript (4 segments)
I
Interviewer0:10
Prices for the hardware, raising prices for the subscription. Any thoughts on what you'll do pricing?
W
W. Mccarthy0:18
I think there's enormous opportunity for us to flex the business model and dramatically increase the TAM by lowering the cost of entry for new members and playing around with the relationship between the monthly recurring revenue and the upfront revenue. I think there's tremendous opportunity for us to double down on our investment in the user experience, in the content features and functionality. Not focusing on raising prices; I'm focusing on doing exactly the opposite and exploring how much price elasticity there is for the business.
I
Interviewer1:22
All right, that's excellent and people will like that. Now I know you as a man who does not suffer fools gladly, and yet when Peloton told us that it didn't need cash and then did a gigantic raise almost with the same breath, that seemed pretty darn foolish. Something that Barry McCarthy would never do. Are these days over? Are the foolish people ready to go, or are they gone already?
W
W. Mccarthy1:44
Well, for the longest time, the company, I'm told, was pretty accurate in its forecast of its performance, but not in the covenant world. If you are what your track record says you are, then you'd have to say the company was less good than they would have liked to have been at forecasting what the cash needs of the business were. Until we can prove that we are capable of forecasting the performance of the business and meeting those forecast expectations, there will continue to be some uncertainty in the business. Having said that, from where I sit today, given what I know and I've got quite a bit that I have to learn about the business, it looks to me like we're pretty well capitalized for the challenge ahead, principally because of some of the pain that investors have already felt.
