Peloton shares plummeted Thursday after CNBC obtained documents stating the company is temporarily halting the production of its bikes and treadmills.
In a confidential presentation on Jan. 10 obtained by the outlet, the company said Bike production would be paused for two months in February and March, and that the production of other equipment will also face delays.
The company said the “significant reduction” is due to falling demand for its products. The CNBC report said that demand for the company’s bikes, tread machines and other products spiked during the pandemic, but has fallen amid higher competition and as the pandemic fades.
The report said Peloton’s Bike+ production was halted in December and won’t come back until June while no more Tread+ machines are expected to be produced in the 2022 fiscal year.
The CNBC report also said the Peloton had set expectations too high for sales in its final quarter, in part because it had not factored in how some higher costs to consumers related to the products would affect demand.
After CNBC’s report, Peloton’s shares dropped 23.9 percent to a 52-week low of $23.25 during trading.
The company released a statement later Thursday after the CNBC report detailing its preliminary second quarter fiscal results and addressing the need for the company to take “corrective action.”
The total revenue the company will end with is $1.14 billion, compared to between $1.1 and $1.2 billion in previous guidance. Adjusted losses, excluding taxes, interest, depreciation and amortization, ended between $270 and $260 million, compared to previous guidance of $350 to $325 million.
“As we discussed last quarter, we are taking significant corrective actions to improve our profitability outlook and optimize our costs across the company,” co-founder and CEO John Foley said.
“This includes gross margin improvements, moving to a more variable cost structure, and identifying reductions in our operating expenses as we build a more focused Peloton moving forward. This work is still underway and we expect to have more details to share when we report earnings on February 8, 2022,” he added.
Peloton saw major success in 2020 when gyms were closed and people had to work out at home.
In 2020, the company faced the issue of not having enough product to satisfy orders. The company bought larger production space and produced many machines that are now left over since they overestimated consumer demand.
Updated: Jan. 21 at 10:11 a.m.