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Peloton Temporarily Pulls Production Plug on its Bike & Tread

Peloton Temporarily Pulls Production Plug on its Bike & Tread

The move comes as demand for Peloton continues to decline & PTON execs sold $500 million worth of stock

As Peloton’s second-quarter fiscal reports are set to be released on February 8th, the interactive fitness company has decided to temporarily halt production of its signature Peloton Bike and Tread. The bold move, according to internal documents obtained by CNBC, comes as demand for Peloton products has continued to decline. Shares have plummeted as much as 25% in response.

Peloton will pause its bike production for two months and won’t produce Tread for six weeks, according to the documents. CNBC also reports that Peloton doesn’t plan to produce any Tread+ machines in fiscal 2022. It was recently reported that Peloton executives sold nearly $500 million worth of their stock before the significant decline, according to SEC filings. CEO and co-founder John Foley, reportedly sold $119 million worth of Peloton’s stock starting in November 2020, according to SmartInsider.

Peloton has been looking to review its cost structure and hired well-known management consulting company McKinsey & Co., to advise the interactive fitness brand. According to recordings obtained by CNBC, job cuts were discussed as well as tasking brick-and-mortar Peloton employees at retail locations to handle customer service calls during downtime. Employee morale at Peloton has been described as at an all-time low.

The company also announced this week that it would increase setup and delivery costs starting January 31, citing inflation and supply chain challenges.

CNBC reported that Peloton’s chief marketing and communications officer, Dara Treseder, addressed the increase in a meeting: “Right now, people are raising prices. Ikea just raised prices. We want to go in the middle of the pack,” Treseder is quoted as saying in a recording of the meeting, which was obtained by CNBC.

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“Like many other businesses, Peloton is being impacted by global economic and supply chain challenges that are affecting the majority, if not all, businesses worldwide,” a Peloton spokesperson told CNBC in an e-mailed statement. “Even with these increases, we believe we still offer the best value in connected fitness, and offer consumers various financing options that make Peloton accessible to a wide audience.”

Google’s search trend data revealed earlier this month that demand for Peloton’s products were on the decline.

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