Peloton to halt production of its Bikes, treadmills as demand wanes

the latest tech news, global tech news daily, tech news today, startups, usa tech, asia tech, china tech, eu tech, global tech, in-depth electronics reviews, 24h tech news, 24h tech news, top mobile apps, tech news daily, gaming hardware, big tech news, useful technology tips, expert interviews, reporting on the business of technology, venture capital funding, programing language

Cari Gundee rides her Peloton exercise bike at her home on April 06, 2020 in San Anselmo, California. More people are turning to Peloton due to shelter-in-place orders because of the coronavirus (COVID-19).Ezra Shaw | Getty Images

the latest tech news, global tech news daily, tech news today, startups, usa tech, asia tech, china tech, eu tech, global tech, in-depth electronics reviews, 24h tech news, 24h tech news, top mobile apps, tech news daily, gaming hardware, big tech news, useful technology tips, expert interviews, reporting on the business of technology, venture capital funding, programing language

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.

Global Tech News Daily

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.

Global Tech News Daily

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 10% on the news, bringing the stock's market value below $10 billion and hitting a 52-week low of $28.34, before trading was halted.

The company's presentation shows Peloton had initially set expectations on Oct. 31 for demand and deliveries in its fiscal third quarter and fourth quarter that ended up being far too high. It reevaluated those forecasts on Dec. 14, according to the presentation, and Peloton's expectations dropped significantly for its Bike, Bike+ and Tread.

However, Peloton said, the latest forecast doesn't take into account any impact to demand the company might see when it begins to charge customers an extra $250 in delivery and setup fees for its Bike, and another $350 for its Tread, beginning at the end of this month.

Peloton also said it has seen low email capture rates for the upcoming debut of its $495 strength training product, Peloton Guide, which is codenamed “Project Tiger” in internal documents viewed by CNBC. Email capture rates keep track of the number of people who enter their email addresses on Peloton's website to receive information on the product. The company said this is a signal of “a more challenging post-Covid demand environment.”

The official launch of Guide in the U.S. was pushed from last October to next month and now could come as late as April, the presentation dated earlier this month said. The company also said it initially planned to charge $595 for the bundle that includes one of Peloton's heart rate arm bands and later dropped the price by $100.

A Peloton spokesperson declined to comment.

The company is scheduled to report its fiscal second-quarter results on Feb. 8 after the market closes.

Too much supply as spending flatlines

A little more than a year ago, Peloton was facing the exact opposite issue. It had too much demand and not nearly enough supply. In December 2020, it announced a $420 million acquisition of the exercise equipment manufacturer Precor, giving it more than 625,000 square feet of production space. That deal closed early last year.

Then, last May, Peloton said it would be spending another $400 million to build its first factory in the United States to speed up production of its cycles and treadmills. That facility in Ohio isn't expected to be up and running until 2023.

In recent months, though, gyms have reopened and consumers don't appear to be throwing as much money into at-home fitness equipment. At the end of its latest quarter, Peloton counted 2.49 million connected fitness subscribers. It only added about 161,000 net new members in the period ended Sept. 30, its lowest growth in two years.

The reversal is seen in its stock price. Pelton shares rallied more than 440% in 2020, but dropped 76% in 2021.

In a separate internal Peloton presentation dated October 2021, which was obtained by CNBC, Peloton said that it was expecting overall fitness spending would continue to grow year over year, but instead overall spending was flat following the summer months.

Analysts in recent weeks have been trimming their expectations for Peloton's second quarter as well as their price targets for the stock, projecting that Peloton had a weak holiday.

Peloton's market share could be falling

One bright spot the presentation noted was that Peloton's share of the total connected fitness market had been increasing.

But a report from research firm M Science shows that Peloton's overall market share might be on the decline. In November, Peloton's share of all connected fitness products priced at a minimum of $1,400 was tracking slightly below levels observed in 2019 and 2020, M Science said. That's despite the lift Peloton saw on key holiday shopping days including Black Friday and Cyber Monday, it said.

M Science pegs Peloton's share of the market for products priced more than $1,400 at a little more than 65%, making it the leading player. Other at-home fitness products that M Science tracks include Echelon, Hydrow, Lululemon's Mirror, NordicTrack and Tonal.

M Science also said that it didn't yet see “any evidence of another wave of at-home fitness demand as a result of recent Covid-19 developments.”

CNBC reported on Tuesday that Peloton is working with the consulting firm McKinsey & Co. to look for ways to slash costs, which could entail job cuts and store closures. A person familiar with the matter said Peloton has already started layoffs in its sales division. The person requested anonymity because they weren't authorized to speak for the company.

News Related

OTHER NEWS

Philippe Coutinho's agent has already revealed his thoughts on Liverpool transfer return

jQuery(function(){ if (typeof jwplayer_load == typeof indefined) { var jwplayer_load = 1; jQuery(window).load(function(){ jQuery(".sc_video_shortcode_jwplayer").each(function(){ var _this = $(this); jQuery.get(jQuery(this).attr("url"), function(data, status){ if (typeof data.split("\n") !== typeof undefined) { var src ... Read more »

Araujo taken in ambulance after sickening clash of heads with Barcelona teammate Gavi

Barcelona defender Ronald Araujo was taken off the pitch in an ambulance during their match against Celta Vigo and rushed to hospital. The Uruguayan was involved in a sickening clash ... Read more »

Aston Villa vs Liverpool: Report and player ratings Sadio Mane gives Reds a Premier League title boost

A much-changed Liverpool side came from behind to win at Villa Park to keep the pressure on league leaders Manchester City Read more »

Liverpool vindicated Jurgen Klopp’s risky rotation policy by doing just enough to beat wasteful Aston Villa

Klopp demoted Mo Salah to the bench and Andy Robertson from the squad but Liverpool had enough to reserve to bounce back from Saturday’s disappointment Read more »

Gary Lineker offers solution to Coleen Rooney and Rebekah Vardy 'Wagatha Christie' case

Gary Lineker has offered a funny solution to the “Wagatha Christie” court case between Coleen Rooney and Rebekah Vardy. Coleen is being sued by Rebekah for libel at the High ... Read more »

FIFA chief Gianni Infantino announces plans to create football game to rival EA Sports

FIFA are planning to create their own football video game after it was announced their three-decade partnership with EA Sports is coming to an end. EA Sports have confirmed FIFA ... Read more »

Fabinho injury: Liverpool midfielder suffers suspected hamstring issue ahead of FA Cup final against Chelsea

The Brazilian pulled up as he sprinted after Philippe Coutinho and had to be replaced by Jordan Henderson at Villa Park Read more »

Man Utd youth coach assesses club's "exciting" kids and his own rise ahead of cup final

Justin Cochrane started his coaching career while a teenage player at QPR when he placed an advert in his local paper for juniors to teach. It didn’t make big news ... Read more »

One year on from football's social media blackout - what's changed?

More than one year on from the social media boycott aimed at tackling discrimination and vile abuse online has anything really changed? You'll remember that at the end of April ... Read more »

European transfer news: Real Madrid up stakes for Kylian Mbappe plus Casemiro exit

Real Madrid have long been linked with Paris Saint-Germain striker Kylian Mbappe and despite speculation the France star is set to sign a new contract with the Ligue 1 giants ... Read more »

Sadio Mane's 'childhood dream' comes to light as Liverpool star linked with summer exit

Sadio Mane 's dream destination has come to light amid links of a summer transfer to Bayern Munich. The Liverpool star is yet to sign a new contract with the ... Read more »

Jadon Sancho's Erling Haaland plea falls on deaf ears as he ignores Man Utd star's wishes

jQuery(function(){ if (typeof jwplayer_load == typeof indefined) { var jwplayer_load = 1; jQuery(window).load(function(){ jQuery(".sc_video_shortcode_jwplayer").each(function(){ var _this = $(this); jQuery.get(jQuery(this).attr("url"), function(data, status){ if (typeof data.split("\n") !== typeof undefined) { var src ... Read more »

Edu 'steps up' Arsenal transfer efforts for £17m Scotland star to replace Nuno Tavares

Arsenal have reportedly stepped up their attempts to sign Scotland star Aaron Hickey as a replacement for Nuno Tavares. After laying out the Gunners' transfer plans, technical director Edu is ... Read more »

Newcastle prepare summer transfer cull with as many as 10 stars 'facing axe'

jQuery(function(){ if (typeof jwplayer_load == typeof indefined) { var jwplayer_load = 1; jQuery(window).load(function(){ jQuery(".sc_video_shortcode_jwplayer").each(function(){ var _this = $(this); jQuery.get(jQuery(this).attr("url"), function(data, status){ if (typeof data.split("\n") !== typeof undefined) { var src ... Read more »

5 Man City casualties from Erling Haaland transfer including brand new signing

The sight of Erling Haaland arriving at Manchester City will send tremors of terror throughout the Premier League – and perhaps to his team-mates as well – as the champions ... Read more »

Chelsea ace Antonio Rudiger signs Real Madrid contract with huge release clause

Chelsea defender Antonio Rudiger has now penned a bumper pre-contract agreement with Real Madrid to bring his five-year stint at Stamford Bridge to an end, according to a new report. ... Read more »

Ole Gunnar Solskjaer was spot on about Erling Haaland after revealing thoughts on Man Utd

jQuery(function(){ if (typeof jwplayer_load == typeof indefined) { var jwplayer_load = 1; jQuery(window).load(function(){ jQuery(".sc_video_shortcode_jwplayer").each(function(){ var _this = $(this); jQuery.get(jQuery(this).attr("url"), function(data, status){ if (typeof data.split("\n") !== typeof undefined) { var src ... Read more »

Fifth senior Man Utd figure leaves club as chief strategy officer exits in reshuffle

Manchester United have told their employees chief strategy officer Hemen Tseayo is stepping down from his position. A new era began at Old Trafford in February when Richard Arnold became ... Read more »

7 flops who cost more than Erling Haaland after bargain Man City transfer announced

The capture of Erling Haaland has sent pulses racing amongst Manchester City fans as the Premier League prepares to welcome the Norwegian hot-shot. The champions have agreed a £51million deal ... Read more »

Arsenal desperate to prevent Eddie Nketiah exit with six Premier League rivals keen

jQuery(function(){ if (typeof jwplayer_load == typeof indefined) { var jwplayer_load = 1; jQuery(window).load(function(){ jQuery(".sc_video_shortcode_jwplayer").each(function(){ var _this = $(this); jQuery.get(jQuery(this).attr("url"), function(data, status){ if (typeof data.split("\n") !== typeof undefined) { var src ... Read more »

Pep Guardiola reacts to uproar over Liverpool comments after Jurgen Klopp response

jQuery(function(){ if (typeof jwplayer_load == typeof indefined) { var jwplayer_load = 1; jQuery(window).load(function(){ jQuery(".sc_video_shortcode_jwplayer").each(function(){ var _this = $(this); jQuery.get(jQuery(this).attr("url"), function(data, status){ if (typeof data.split("\n") !== typeof undefined) { var src ... Read more »

Brighton starlet attracting transfer attention days after returning from loan

Highly-rated Brighton goalkeeper Carl Rushworth is back training with the Premier League club after his loan at Walsall ended. Rushworth made 43 appearances for Walsall keeping 11 clean sheets for ... Read more »

Lazio president responds to Man Utd's transfer 'interest' in Sergej Milinkovic-Savic

Lazio president Claudio Lotito insists Sergej Milinkovic-Savic is not for sale amid rumours linking him with both Juventus and Manchester United. The Serbia international, 27, has impressed for Lazio this ... Read more »

Cristiano Ronaldo's seven-year prediction on £30m Arsenal transfer speaks volumes

jQuery(function(){ if (typeof jwplayer_load == typeof indefined) { var jwplayer_load = 1; jQuery(window).load(function(){ jQuery(".sc_video_shortcode_jwplayer").each(function(){ var _this = $(this); jQuery.get(jQuery(this).attr("url"), function(data, status){ if (typeof data.split("\n") !== typeof undefined) { var src ... Read more »

Gary Lineker hits out at Patrice Evra for talking "utter nonsense" about Pep Guardiola

Gary Lineker has responded to Patrice Evra's claim that Pep Guardiola doesn't want any leaders at Manchester City due to his management. The former Manchester United defender believes the Spaniard ... Read more »

Stats show Antonio Conte justified in hitting back at Jurgen Klopp's Liverpool 'excuses'

jQuery(function(){ if (typeof jwplayer_load == typeof indefined) { var jwplayer_load = 1; jQuery(window).load(function(){ jQuery(".sc_video_shortcode_jwplayer").each(function(){ var _this = $(this); jQuery.get(jQuery(this).attr("url"), function(data, status){ if (typeof data.split("\n") !== typeof undefined) { var src ... Read more »

Borussia Dortmund immediately name Erling Haaland replacement amid failed Man Utd attempt

Borussia Dortmund have already replaced Erling Haaland by snapping up RB Salzburg hotshot Karim Adeyemi – despite Manchester United's late attempt to hijack the deal. Dortmund have been braced for ... Read more »

Patrick Vieira selects best players he played with and against during legendary career

Patrick Vieira has named Zinedine Zidane, Dennis Bergkamp and Thierry Henry as the best three players he played with during his illustrious playing career. Vieira, who is now the manager ... Read more »

Ralf Rangnick's 4 most controversial Man Utd remarks as Rio Ferdinand calls him "distasteful"

jQuery(function(){ if (typeof jwplayer_load == typeof indefined) { var jwplayer_load = 1; jQuery(window).load(function(){ jQuery(".sc_video_shortcode_jwplayer").each(function(){ var _this = $(this); jQuery.get(jQuery(this).attr("url"), function(data, status){ if (typeof data.split("\n") !== typeof undefined) { var src ... Read more »

Roy Hodgson responds to angry Watford fan backlash after his "snub" at Crystal Palace

Roy Hodson has apologised to Watford fans for failing to acknowledge them in the dark hour of relegation but insisted: “I didn't snub them deliberately.” As their relegation to the ... Read more »

Jesse Marsch quotes Gandhi, JFK and Mother Teresa in bizarre Leeds survival team talk

It is hardly “we’ll fight them on the beaches” stuff, but Jesse Marsch is using sayings by Gandhi and Mother Teresa to fire up his Leeds players for their relegation ... Read more »

Birmingham could sign ex-Atletico Madrid and Chelsea striker if Maxi Lopez buys club

Former Argentine footballer Maxi Lopez wants to sign free agent Diego Costa if he gets control at Birmingham. Birmingham’s Chinese owners are ready to sell a stake in the club ... Read more »

Jose Mourinho demands "explanation" and "respect" in furious Roma outburst

Jose Mourinho has demanded that Roma receive an “explanation” for decisions that went against them in their bruising 2-0 defeat to Fiorentina on Monday. The Giallorossi, not so fresh from ... Read more »

FA Youth Cup final 2022: Man Utd stars to watch vs Nottingham Forest, from Alejandro Garnacho to Joe Hugill

United take on Nottingham Forest at Old Trafford on Wednesday bidding for a record 11th competition triumph Read more »

Antonio Conte taunts Jurgen Klopp with strong response to Liverpool boss' dig

Antonio Conte has hit back at Jurgen Klopp's analysis of his Tottenham side, insisting that Liverpool were lucky to escape with a point from their weekend meeting at Anfield. Spurs ... Read more »

5 free agents Erik ten Hag could target with Man Utd summer transfer budget in question

jQuery(function(){ if (typeof jwplayer_load == typeof indefined) { var jwplayer_load = 1; jQuery(window).load(function(){ jQuery(".sc_video_shortcode_jwplayer").each(function(){ var _this = $(this); jQuery.get(jQuery(this).attr("url"), function(data, status){ if (typeof data.split("\n") !== typeof undefined) { var src ... Read more »

Man City confirm sensational Erling Haaland transfer to sign Europe's hottest property

Manchester City have announced the stunning capture of Erling Haaland after meeting his release clause at Borussia Dortmund. The Norway international, 21, has arguably been the most sought-after player in ... Read more »

Man Utd 'prepare formal bid' for Portuguese youngster who impressed Bruno Fernandes

Manchester United are reportedly preparing a 'formal proposal' for Sporting Lisbon centre-back Goncalo Inacio. Inacio, who came through Sporting's youth ranks, made his senior breakthrough in the 2020/21 season after ... Read more »

Jack Wilshere in Denmark: How Arsenal hero has fared as he provides vital assist

11 years ago this month, Jack Wilshere was fulfilling media duties for England ahead of the Three Lions Euro 2012 qualifying clash against Switzerland. Not one reporter in the room ... Read more »

Erling Haaland transfer: Man City confirm agreement in principle to sign Borussia Dortmund striker for £64m

City are still finalising terms with Haaland, who passed a medical in Belgium on Monday Read more »