Internet fitness platform Peloton announces it will stop producing bicycles and treadmills: will outsource hardware, focus on content

According to reports, the US Internet fitness platform, sports equipment manufacturer Peloton announced today that it will stop the production of bicycles and treadmills, and turn the production task to partners to simplify operations and reduce costs.

“We believe this and other initiatives will allow us to continue to reduce the cash burden on our business and increase our flexibility,” said Peloton CEO Barry McCarthy.

Peloton was once the darling of the epidemic, but as the epidemic improved and the government eased related restrictions, Peloton’s inventory began to swell, and many users canceled subscriptions, causing Peloton’s business to plummet.

In premarket trading today, Peloton shares fell as much as 1.8%, but then bucked the trend and rose 1.4%. The reason is that Peloton announced that it will extend its partnership with Taiwan’s Rexon Industrial (Lishan Industrial Co., Ltd.), which will become the main manufacturer of Peloton hardware products.

Earlier this year, under pressure from an activist investor, Peloton changed its CEO and announced price cuts and massive layoffs. Peloton CEO McCarthy warned in May that the company’s lack of capital, rising inventories and rising costs could lead to huge losses in the quarter ended June.

Meanwhile, Peloton also said today that it will suspend operations at Tonic fitness facilities until the end of the year. Peloton acquired Tonic in October 2019.

McCarthy said in February that Peloton would focus on content. The magic of the Peloton, he says, is its digital screen, not a connected bike or treadmill. Expanding the digital community and enhancing content could make Peloton “a very fast-growing, very high-margin business.”

McCarthy also emphasized that Peloton is “a connected fitness company, not a bicycle company.”

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