Peloton Will Stop Production of its Bikes for This Reason

According to a CNBC report, exercise machine maker Peloton is temporarily halting production of its bikes and treadmills as demand wanes.

CNBC has obtained internal documents that state the above move. On January 10th, the company said in a confidential presentation dated Jan. 10 that demand for its connected fitness equipment has faced a “significant reduction” around the world due to shoppers’ price sensitivity and amplified competitor activity.

Peloton plans to pause Bike production for two months, from February to March, the documents revealed.

The company has already halted production of its more expensive Bike+ in December and will do so until June. It won’t manufacture its Tread treadmill machine for six weeks, beginning next month. The documents also reveal that the company doesn’t anticipate producing any Tread+ machines in fiscal 2022. Peloton had previously halted Tread+ production after a safety recall last year.

The planned production halt comes as close to $40 billion has been shaved off of Peloton’s market cap over the past year.

Peloton plans to report fiscal second-quarter results on Feb. 8 after the market closes.

Late Thursday, Chief Executive Officer John Foley said in a statement, “As we discussed last quarter, we are taking significant corrective actions to improve our profitability outlook and optimize our costs across the company. This includes gross margin improvements, moving to a more variable cost structure, and identifying reductions in our operating expenses as we build a more focused Peloton moving forward.”

Shares closed Thursday down 23.9% at $24.22, bringing the stock’s market value to $7.9 billion. During trading, shares hit a 52-week low of $23.25.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.