Peloton Suspends Production

Supply has outstripped demand as potential customers return to gyms
By Bob Cronin,  Newser Staff
Posted Jan 20, 2022 5:05 PM CST
Peloton Suspends Production
The Peloton logo is displayed on the company's stationary bicycle in New York in 2019.   (AP Photo/Mark Lennihan, File)

With demand no longer on an incline, Peloton plans to stop making its bike and treadmill equipment for a while. The company overestimated its market, CNBC reports, and now has thousands of unsold treadmills and cycles on its hands—on cargo ships or in warehouses. A company memo attributed the drop in demand to consumers' price sensitivity and increased competition. Shares closed Thursday at $24.22, off 24%. That puts the stock’s market value at $7.9 billion. The company's production halt will affect its:

  • Bikes: None will be made for two months, February and March.
  • Bike+: Production of the more expensive cycle was stopped last month and won't resume until June.
  • Tread: Starting next month, this treadmill machine won't be manufactured for six weeks.
  • Tread+: After a safety recall in 2021, production of this model was shut down. The memo shows the company doesn't plan to resume making it in fiscal 2022.

The company had already told investors it was looking for ways to cut costs, per the Wall Street Journal. It was only a year or so ago that Peloton couldn't meet demand, per CNBC, and added production capacity by buying Precor, another maker of exercise equipment. But that was when more people were staying home because of the pandemic; many are going to gyms again to work out. Peloton also is signing up fewer connected fitness subscribers now. The company issued no comment Thursday about the production changes. (The company cut prices on its basic bike last year when demand eased.)

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