Peloton is temporarily halting production of its Bike, Bike+, and Tread products due to a declining consumer demand as the company is trying to control costs, according to internal documents obtained by CNBC.
The company plans to pause Bike production for two months, from February through March. They had already stopped production of the more expensive Bike+ in December, and will continue to do so until June.
The Tread machines won't be manufactured for six weeks, starting next month. Peloton does not plan to produce any Tread+ machines in 2022, after they previously stopped production last year due to a safety recall.
Peloton said in a confidential presentation dated Jan. 10 that there was a “significant reduction” of demand for its products worldwide due to price sensitivity and more competitor products on the market.
Demand increased drastically during the COVID-19 pandemic in 2020, but now Peloton has thousands of cycles and treadmills sitting in warehouses or on cargo ships.
Peloton's stock has taken a big hit this year, losing close to $40 billion in its market cap. Their current market cap is at $7.91 billion, and was close to $50 billion in January of 2021.
Peloton shares closed on Thursday down 23.93% at $24.22. Their 52-week low was valued at $23.25 per share.
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The presentation showed that they initially set expectations for demands and deliveries for the fiscal third and fourth quarters on Oct. 31, and ended up being too high. Peloton reevaluated its forecasts on Dec. 14 and dropped expectations for its products.
They are scheduled to report fiscal second quarter results on Feb. 8.
Peloton's latest forecast is not considering the impact it could have once they start charging customers at the end of this month an additional $250 in delivery and setup fees for its Bike, and another $350 for its Tread.
For reference, the least expensive Bike on Peloton's website costs $1,495, including delivery and setup, while the Tread Basics retails for $2,495. The Bike+ Family bundle and Tread Family bundle are the most expensive products, both costing $2,945.
Additionally, the company is planning to debut its $495 strength training product, Peloton Guide, codenamed "Project Tiger" in internal documents viewed by CNBC. The company has seen low email captures with the product, which keeps track of the number of people who enter their email address to receive information on the product.
The Peloton Guide was pushed from October 2021 to next month, and now could come as late as April, according to their presentation. They originally were going to charge $595 for the bundle that includes one of their heart rate arm bands.
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