Shares of Peloton—which surged during the pandemic as house-bound consumers grasped for ways to stay healthy—plunged over 20% on Thursday after reports that the company will temporarily halt production of its at-home fitness products as it looks to cut costs amid a "significant reduction" in consumer demand.
Peloton will temporarily stop making at-home fitness products, including its Bikes and treadmills, CNBC first reported on Thursday.
The news caused Peloton shares to plunge as much as 24%—with trading temporarily halted—before the stock pared back losses somewhat, down 22% as of 3:00 p.m. EST.
The company will halt Bike production for two months—from February to March—and will also suspend production of its treadmills for six weeks starting in February, according to internal documents reviewed by CNBC.
The company reportedly said that demand for its at-home fitness equipment has seen a "significant reduction" around the world, with Peloton evidently having underestimated how many people would still be buying its products after pandemic lockdowns ended.
The at-home fitness equipment maker now reportedly has a large inventory—with thousands of Bikes and treadmills—that it is struggling to offload.
Peloton did not immediately respond to Forbes ' requests for comment.
With its stock tanking on Thursday, Peloton now has a market capitalization of around $8 billion. That's down from a peak of $50 billion in January 2021.
Peloton was once considered a pandemic-era stock market darling amid high demand from customers stuck at home during lockdowns—and shares skyrocketed roughly 440% in 2020. After that banner year, however, Peloton shares fell over 70% in 2021 amid increasing concerns about the company's future growth prospects. Throughout last year, Peloton faced slowing demand as people returned to gyms—and subsequently had to slash prices for its exercise bikes and other products. Last November, Peloton saw its stock plunge 35% in a single day after reporting lackluster third-quarter earnings and slashing sales forecasts for 2022.
What To Watch For:
Peloton will report quarterly earnings on after the market close on February 8. Most Wall Street analysts aren't optimistic and predict that Peloton likely had a weak holiday sales season.
In December, Peloton shares plunged after a major character portrayed by the actor Chris Noth in HBO's Sex and the City reboot And Just Like That…. died on-screen while riding one of the company's bikes. The negative press had Peloton playing damage control —and they quickly released a parody commercial starring Noth in response to the Sex and The City reboot. But then Peloton soon had to pull the ads after Noth was accused of sexually abusive relationships
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