Peleton decides to stop making their own bikes to stop the stock slide

PELETON Interactive rallied as much as 6.8 percent yesterday after announcing plans to stop in-house manufacturing and rely solely on partners for production.

The move is a reversal from Peloton’s strategy over the past three years, when it divided production between its own facilities and partners.

The company built some of its standard Bike models and the high-end Bike+ with facilities it acquired as part of its 2019 purchase of Tonic Fitness Technology. The company also relied on Taiwan-based manufacturing partner Rexon Industrial to build bicycles and its Tread treadmill.

Now the company will cease operating its Tonic facilities and shift all production of bicycles and treadmills to Rexon, Chief Supply Chain Officer Andrew Rendich told Bloomberg News in an interview.

“We’re going back to nothing but manufacturing in partnership,” he said. “It allows us to ramp up and down based on capacity and demand.”

Peloton is making the switch after several months of turmoil. In February, veteran media executive Barry McCarthy replaced co-founder John Foley as chief executive officer, and the company laid off nearly 3,000 employees, including many members of its executive team. Mr. Rendich was appointed to his position in March.

Peloton, a stock market juggernaut in the early days of the pandemic, has seen its share price fall about 75 percent this year. As gyms and utility rooms began reopening last year, Peloton’s growth faltered.

The company had incorrectly predicted its store would survive the reopenings and it was left with an oversupply of gear.

The company previously canceled a plan to build its equipment in Ohio. Peleton decides to stop making their own bikes to stop the stock slide

Fry Electronics Team

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