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Peloton to halt production of its Bikes, treadmills as demand wanes- CEO says report false
Posted on 1/20/22 at 12:27 pm
Posted on 1/20/22 at 12:27 pm
quote:
Peloton is temporarily halting production of its connected fitness products as consumer demand wanes and the company looks to control costs, according to internal documents obtained by CNBC.
Peloton plans to pause Bike production for two months, from February to March, the documents show. It 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. And it doesn’t anticipate producing any Tread+ machines in fiscal 2022, according to the documents. Peloton had previously halted Tread+ production after a safety recall last year.
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 has essentially guessed wrong about how many people would be buying its products, after so much demand was pulled forward during the coronavirus pandemic. It’s now left with thousands of cycles and treadmills sitting in warehouses or on cargo ships, and it needs to reset its inventory levels.
The planned production halt comes as close to $40 billion has been shaved off of Peloton’s market cap over the past year. Its market value hit a high of nearly $50 billion last January. But on Tuesday its shares tumbled to a 52-week low of $29.11 — nearly falling below the $29 mark, where it priced its initial public offering in September 2019.
Peloton’s shares fell more than 20% on the news, bringing the stock’s market value below $8 billion and hitting a 52-week low of $24.02, before trading was halted.
UPDATE from Peloton CEO:
quote:
tl,dr: Rumors that we are halting all production of bikes and Treads are false
The following is a note Peloton Co-Founder and CEO John Foley sent to the Peloton Team on January 20, 2022.
We have always done our best to share news with you all first, before sharing with the public. This week, we’ve experienced leaks containing confidential information that have led to a flurry of speculative articles in the press. The information the media has obtained is incomplete, out of context, and not reflective of Peloton’s strategy. It has saddened me to know you read these things without the clarity and context that you deserve. Before I go on, I want all of you to know that we have identified a leaker, and we are moving forward with the appropriate legal action. But moving forward, I want to take a moment to talk about some of the changes with you directly.
As a public company that is in a pre-earnings “Quiet Period”, we are limited in what information we can share. However, we issued a pre-earnings press release earlier this evening about our preliminary Q2 results, in order to offer an initial and more accurate picture of our business performance.
As you have heard me and other leaders say over the past few months, we are continuing to invest in our growth, but we also need to review our cost structure to ensure we set ourselves up for continued success, while never losing sight of the important role we play in helping our 6.2+ million Members lead healthier, happier lives.
What this means for our team right now
In the past, we’ve said layoffs would be the absolute last lever we would ever hope to pull. However, we now need to evaluate our organization structure and size of our team, with the utmost care and compassion. And we are still in the process of considering all options as part of our efforts to make our business more flexible.
This team is made up of some of the smartest, most passionate, hard-working and KIND people I have ever met. You have each painted your masterpiece at Peloton in your own way, and your contributions matter. They always have, and they always will.
I am SO proud of everything we have accomplished together, and it pains me we are faced with these tough decisions. I know this is difficult, and I want to thank you for your patience as we work through these times together.
Rumors that we are halting all production of bikes and Treads are false
Notably, we’ve found ourselves in the middle of a once-in-a-hundred year event with the COVID-19 pandemic, and what we anticipated would happen over the course of three years happened in months during 2020, and into 2021.
We worked quickly and diligently to meet the demand head-on at a time when the world really needed us, in large part thanks to how hard you worked every day. We feel good about right-sizing our production, and, as we evolve to more seasonal demand curves, we are resetting our production levels for sustainable growth.
Connected Fitness is here to stay
This past quarter, our churn rate was 0.79%. This means that our Members are sticking with us, again thanks to your brilliance and continued innovation. Connected fitness provides the convenience people need to stay active and centered and will continue to be a key part of the future of fitness. In fact, just a few days ago, we recorded our highest ever number of daily workouts -- over 2.9M workouts.
I want to acknowledge that this does not answer all of the questions I am sure many of you have right now. But, I did want to share what we could at this time.
I know there is a lot of noise and anxiety in our environment right now, which is why I wanted to take this moment to provide some additional context for you all as we navigate the next few weeks together.
John
LINK
This post was edited on 1/21/22 at 12:42 am
Posted on 1/20/22 at 12:28 pm to rickgrimes
Not a surprise. Go look at the used market on Facebook marketplace. It's insane.
Posted on 1/20/22 at 12:29 pm to rickgrimes
Wow and it’s only 3 weeks after New Years. Guess people are giving up early this year.
Posted on 1/20/22 at 12:29 pm to rickgrimes
banning pro-trump and anti-biden hashtags looks to be working for them really well.
This post was edited on 1/20/22 at 12:30 pm
Posted on 1/20/22 at 12:30 pm to rickgrimes
Who knew people would abandon overpriced subscriptions.
Posted on 1/20/22 at 12:31 pm to rickgrimes
They'll pick up again around next Christmas.
Posted on 1/20/22 at 12:31 pm to Oates Mustache
quote:
Go look at the used market on Facebook marketplace. It's insane.
I've been looking for 3 months now. I can't find any
Posted on 1/20/22 at 12:32 pm to kywildcatfanone
Eh I think part of it is that people really don't understand what a spin class is. I didn't until I tried a friend's Peloton. That shite is brutal and I cycle regularly. I think people just get tired of getting their asses kicked.
Posted on 1/20/22 at 12:33 pm to rickgrimes
How will the house fraus shed their baby fat?
Posted on 1/20/22 at 12:33 pm to rickgrimes
That was the last half decade subscription fitness craze, the new fitness craze is fitness mirrors like tonal and mirror
Posted on 1/20/22 at 12:35 pm to Oates Mustache
quote:
Not a surprise. Go look at the used market on Facebook marketplace. It's insane.
it is insane to me how many people buy one and never use it.
i was pretty against getting one but my wife and i are both doing work on it everyday. It basically replaced the gym membership
i do miss going to a gym some days
Posted on 1/20/22 at 12:36 pm to rickgrimes
The subscription economy has to be one of the most annoying recent market trends. You sell a bike. You aren't a cloud software company. Not everything needs to be a subscription.
Posted on 1/20/22 at 12:37 pm to Oates Mustache
What..... a fitness fad dwindling?!?!??
Posted on 1/20/22 at 12:37 pm to rickgrimes
I mean I just don’t see how this is a sustainable business model. How many people want and have the room for a 3k bike? I’m sure they’re trying to make most of their money on the subscription, but I just don’t see the upside for that company
Posted on 1/20/22 at 12:38 pm to rickgrimes
What happened with that baw who surprised his wife with one for Christmas?
Posted on 1/20/22 at 12:38 pm to Dire Wolf
quote:
i was pretty against getting one but my wife and i are both doing work on it everyday. It basically replaced the gym membership
My wife wants one because she hates going to the gym and her 2 friend have one and she swears she will do rides with them and they will hold each other accountable.
I'm pretty against it, even though I know I'll use it regularly since my new schedule doesn't allow me to get to the gym as much as I like right now, but man...I'm so afraid that in a year it will just be sitting in the corner collecting dust.
I wonder if this means they are going to give some good deals soon?
This post was edited on 1/20/22 at 12:40 pm
Posted on 1/20/22 at 12:38 pm to rickgrimes
Somebody needs to send them a video of a personal trainer saying “Don’t stop! Power through it!”
Posted on 1/20/22 at 12:38 pm to Dire Wolf
quote:
i was pretty against getting one but my wife and i are both doing work on it everyday. It basically replaced the gym membership
Same here. I do a lot of their floor strength exercises and bike bootcamps, which I really like. Once my company returns fully back to working from the office, I might just use the office gym during the week and ride the bike on the weekends.
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