Peloton Interactive (PTON) halts the production of its bikes and treadmills after which the stock dropped around 20%. The company announced stopping the production of the fitness equipment for the time being.
The stock had constantly been sliding but towards the closing on Thursday sunk to $26.35 after the news broke.
The Peloton Interactive stock (PTON) trades at $26.41, down 5.93 points (-18.62%) on January 20 at 1:18 pm EST.
With falling demand for fitness products, Peloton announced that it is stopping the production of the products to control the costs.
Peloton Interactive is looking to announce its second-quarter results on February 8 after the market closes.
Peloton’s plan includes pausing the Bike production for two months manufacturing no bikes in February and March. In December, the company had already stopped the production of its more expensive Bike+ and would not resume it until June this year.
During the six weeks starting February, Peloton Interactive would not manufacture any treadmill machine and does not intend to produce the Tread+ in this fiscal year. Peloton Interactive had halted the production of Tread+ after a safety recall last year.
The company is struggling with a significant reduction in the demand for fitness products worldwide. Shoppers are more price-sensitive, and the competitors’ activities have also amplified recently.
The initial guesses made by the company about the number of people buying its products turned out wrong. The demands were mostly pulled forward during the Covid-19 pandemic. Now, the company is left with thousands of cycles and treadmills in its warehouses or on Cargos, requiring a reset in its inventories.
The planned move comes after a $40 billion loss in Peloton Interactive’s market capitalization over the past year. Last January, the company’s market value had hit $50 billion, but on Tuesday, the PTON stock tumbled to a 52-week low of $29.11. The company had priced its IPO (initial public offering) at $29 in September 2019.