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Peloton stops making bikes in US as shares hit all-time low

Fresh woes for brand that became darling of Wall Street as share price soared in lockdown

Indoor fitness brand Peloton is to stop manufacturing its bikes and treadmills in-house and within the US, and will instead outsource the process to Taiwan and existing partner Rexon.

The New York City-based brand saw booming sales in 2020 as the COVID-19 pandemic led to governments in key markets including the US and UK impose lockdown measures, leading people to undertake exercise at home.

Just 18 months ago, the company was one of the darlings of Wall Street as its share price, buoyed by soaring sales and the business going into profitability for the first time in its history, soared to nearly six times what it had been when it went public in 2017.

Ambitious growth plans were announced, including setting up a factory in Ohio to reduce its dependency on overseas suppliers.

The growth in sales and profits proved unsustainable, however – due also in part to increased competition in connected fitness – and turnover has crashed, with the company also back in the red, resulting in founder John Foley stepping down from his position as CEO.

The plans for that factory in the US have now been shelved, and the company has made thousands of US-based employees redundant.

> Peloton’s parting gift to 2,800 employees it just fired? A year’s free membership …

Floated on NASDAQ exchange in September 2019 with an initial share price of $29, Peloton shares hit a high of $162.72 on Christmas Eve 2020.

However, they are now trading at around one twentieth of that value, with shares trading at an all-time low of $8.42 at the time of writing.

To put that into context … you may remember the company’s 2019 pre-Christmas advert, which was widely slammed for being sexist.

> When ads backfire - what went wrong with THAT Peloton spot?

The 30-second spot showed a husband gifting a Peloton bike to his wife,  who then dutifully rode it throughout the following 12 months before giving him a video the following Christmas showing her using it during the year.

A better present to him may have been buying him the equivalent sum in Peloton shares – $2,000 – that the bike would have cost him 12 months previously.

Those shares – assuming he’d held on to them – would be worth around $100 right now.

The company’s Chief Supply Chain Officer, Andy Rendich, put a brave face on its latest news, saying:  “We are thrilled to be expanding our partnership with Rexon, a leading Taiwanese manufacturer with over 50 years of experience.

“Rexon has been with Peloton for many years and is a proven partner for our global operations.

“We plan to maintain a significant corporate and manufacturing presence in Taiwan with over 100 Peloton Taiwan team members who continue to play a key role in our engineering and manufacturing strategy.”

CEO Barry McCarthy added: “Today we take another significant step in simplifying our supply chain and variablizing [No, really – ed] our cost structure – a key priority for us.

“We believe that this along with other initiatives will enable us to continue reducing the cash burden on the business and increase our flexibility.

“Partnering with market-leading third party suppliers, Peloton will be able to focus on what we do best – using technology and content to help our 7 million Members become the best versions of themselves.”

Simon joined road.cc as news editor in 2009 and is now the site’s community editor, acting as a link between the team producing the content and our readers. A law and languages graduate, published translator and former retail analyst, he has reported on issues as diverse as cycling-related court cases, anti-doping investigations, the latest developments in the bike industry and the sport’s biggest races. Now back in London full-time after 15 years living in Oxford and Cambridge, he loves cycling along the Thames but misses having his former riding buddy, Elodie the miniature schnauzer, in the basket in front of him.

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17 comments

Avatar
Blackthorne | 2 years ago
1 like

"simplifying our supply chain and variablizing"

Prime grade corporatespeak. Simplifying how? Verbal vomit that all but guarantees investor exodus. Written by none other than the PR experts, why do they exist again?

Avatar
RoubaixCube | 2 years ago
4 likes

Funny how they blame their competition rather than world coming out of lockdown and being able to do things like go outside and back to the gym again -  which of course is one of the driving factors behind their decline and lack of uptake of their services and equipment. How do you sell exercise bikes to people who have already got one or subscribed to the service? You just cant.

It was never a bubble that was going to last. They took a gamble ane expanded their operation and their gamble failed.

The most important thing is if they made enough hay while the sun shined 

Avatar
dreamlx10 | 2 years ago
3 likes

They're not "bikes" 

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Secret_squirrel replied to dreamlx10 | 2 years ago
1 like

Why not?  Who are you to define what a bike is?

Avatar
JimM777 replied to Secret_squirrel | 2 years ago
4 likes

Perhaps something like this from a dictionary

vehicle with two wheels in tandem, handlebars for steering, a saddle seat, and pedals by which it is propelled?

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chrisonabike replied to JimM777 | 2 years ago
2 likes

Hmm... this could get complicated.  I think we'll have "lumpers" and "splitters" at odds here.

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hawkinspeter replied to chrisonabike | 2 years ago
3 likes

chrisonatrike wrote:

Hmm... this could get complicated.  I think we'll have "lumpers" and "splitters" at odds here.

That first picture is definitely a unicycle. I'd happily call the other two bikes.

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Steve K replied to Secret_squirrel | 2 years ago
0 likes

Well, I think if you look at the dictionary definition of a bicycle, then they probably aren't.  But then that's true of any exercise bike.

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Secret_squirrel replied to Steve K | 2 years ago
0 likes

Steve K wrote:

Well, I think if you look at the dictionary definition of a bicycle, then they probably aren't.  But then that's true of any exercise bike.

ROFL. The fact you've had to use the word bike prefixed with exercise pretty much makes my point. 

Avatar
Dnnnnnn replied to Secret_squirrel | 2 years ago
10 likes

Secret_squirrel wrote:

Who are you to define what a bike is?

Ooh, this is promising. I think we've exhausted the "what is a woman?" argument, so we need something else to bicker extensively about.

#ExerciseBikesAreBikes

Avatar
mark1a replied to Dnnnnnn | 2 years ago
8 likes

Dnnnnnn wrote:

Secret_squirrel wrote:

Who are you to define what a bike is?

This is promising. I think we've exhausted the "what is a woman?" argument, so we need something else to bicker extensively about.

#ExerciseBikesAreBikes

SERB*

* Static Exclusionary Radical Bicyclist

Avatar
mark1a replied to mark1a | 2 years ago
1 like

mark1a wrote:

SERB*

* Static Exclusionary Radical Bicyclist

TURBO Turbo Uninclusionary Radical Bicyclist Obviously 

Avatar
chrisonabike replied to Dnnnnnn | 2 years ago
3 likes

One of my friends has transitioned - he started with two wheels but has now become a turbo.

I'm aware of exercise bikes which are ridden on the road.

All the OP's comment shows is their odd fixation with wheels.

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Hirsute replied to Secret_squirrel | 2 years ago
0 likes

No balance or forward momentum.

No drivers trying to kill you.

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Hirsute replied to Hirsute | 2 years ago
6 likes

Sorry, got that wrong, you still have to look out for drivers trying to kill you.

//yorkmix.com/wp-content/uploads/2017/09/york-car-crash-house-clifton-pa1-1170x773.jpg)

Avatar
mctrials23 replied to Hirsute | 2 years ago
7 likes

Imagine if you gave up riding on the roads because they are too dangerous so you get yourself a static bike and then that happened. 

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chrisonabike replied to dreamlx10 | 2 years ago
0 likes

A quick trip into the "Cambrian explosion" era of leg-or-hand propelled transport would show that evolution is not fussed about categories.

https://onlinebicyclemuseum.co.uk/date_tax/1870/

https://en.wikipedia.org/wiki/Handcar

https://en.wikipedia.org/wiki/Draisine

There exist some fragmentary traces from the "precambrian era" too.

https://en.wikipedia.org/wiki/Stephan_Farffler

Throwing the net wider - things which may sometimes move but the main purpose is to move something else:

https://www.lowtechmagazine.com/2011/05/pedal-powered-farms-and-factorie...

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