Peloton shares fall 20% after report of temporary shutdown | business news
Shares of Peloton, the affiliated fitness company, fell more than 20% after reports that the company is to halt production of its treadmills and bikes due to falling demand.
Trading in the Nasdaq-listed shares was temporarily halted after Sky’s sister news provider CNBC released details of the company’s apparent decision, which Sky said were contained in a confidential internal presentation it received.
CNBC said the Jan. 10 document shows demand for Peloton gear has “decreased significantly” due to price sensitivity among customers worldwide.
It also blamed increased competitor activity, saying a brief shutdown of treadmills and stationary bikes for two months in February and March would help control costs.
Peloton was among the early winners of the COVID pandemic — with demand for its products soaring as major advertising campaigns offered connected fitness sessions from the comfort of a subscriber’s home during lockdown to protect public health.
However, a gradual return to normal life — with gyms reopening — meant Peloton had been left in warehouses or on cargo ships with thousands of bikes and treadmills, CNBC reported.
Its market value peaked at nearly $50 billion a year ago, but has since lost over $40 billion if you factor in Thursday’s falls.
The company has not yet commented on the report.
Its troubles coincided with the broader Nasdaq index fall into the so-called “correction area”. on Wednesday night – meaning it had closed 10% below its record high set on Nov. 22.
Peloton will release its next financial results on February 8th.