Peloton Pausing Production Of Bikes Amid Slow Sales
Peloton is grappling with a “significant reduction” in demand and will be instituting various halts on the production of its electric bikes and treadmills as a way to offset growing costs.
There are staggered plans for Peloton’s different products, according to the documents obtained by CNBC. Peloton’s standard bikes will cease production from February to March, while the more expensive Bike+ was already halted in December and that will be continued until June of this year.
Peloton’s treadmills are facing similar pauses: The Tread machine will not see production for six weeks beginning in February, and Peloton will likely not produce any Tread+ treadmills following a safety recall last year.
According to a closed-door meeting that took place on Jan 10 among Peloton leadership, consumer price hesitation and increased competition in their field were listed as chief reasons for their product’s waning demand.
Peloton’s stock value ballooned during the early peaks of the coronavirus, reaching a stunning high of $50 billion last January. Going into 2022, however, they have shed a significant amount of that impressive value, with a market cap of only $7.9 billion as of the closure of the stock market Thursday.
Individual prices of Peloton stock are also reportedly below $29, which was the price they set when Peloton first became a public company. With ballooning supply and low demand, the company seems to be in a tight spot ahead of the close of its second fiscal quarter on February 8.
Along with these production halts, CNBC reported Tuesday that Peloton was looking for other ways to cut costs and hired the consulting firm McKinsey & Co. to assist in that process. An anonymous source close to the situation said that layoffs and store closures were likely.