Peloton’s Not Doing So Hot

🚲 The connected fitness company will temporarily halt production of its exercise bikes and treadmills, CNBC first reported yesterday. Its stock closed the day down 24%, falling briefly below its IPO price and wiping $2.5 billion off its market value.

• Starting in February, Peloton will make zero new bikes or treadmills for at least six weeks – and will hold off even longer for products like the Bike Plus, Tread, and Tread Plus (which has had some big safety issues).
• Peloton essentially misjudged consumer demand for its products. It currently has thousands of cycles and treadmills sitting in warehouses or on cargo ships, and it needs to reset its inventory levels.
• When gyms closed earlier in the pandemic, the company couldn’t manufacture enough bikes to meet its demand. But now it has the opposite problem – gyms have reopened, and people just aren’t buying at-home fitness equipment like they used to.
• On Tuesday, CNBC reported that Peloton hired consulting firm McKinsey to help it slash costs. Some of the top execs at the home workout empire have reportedly discussed laying off 41% of the sales and marketing teams, slashing underperformers in the e-commerce department, and closing retail locations.

👁 Looking ahead… There may be more trouble on the horizon. Peloton’s latest forecast doesn’t take into account any impact it might see when it begins to charge customers hundreds in delivery and setup fees later this month (inflation strikes again).

+A slight contrast: Peloton’s stock increased more than 440% in 2020, but dropped ~80% last year.

+For those wondering what time the news broke: If you squint and look close, you just might see it. 👇