Peloton may be toast

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Peloton had a disastrous 2021. But as impossible as it may seem, the exercise equipment company is arguably off to an even worse start to 2022.

Shares of Peloton (PTON) are down nearly 25% this year and trading at their lowest level in nearly two years. The stock was up 12% Friday though after the company confirmed late Thursday that it may be looking to slow production of its bikes and treadmills and potentially lay off workers.

The news came after CNBC reported Peloton was considering pausing production of its low-end bike (which still costs $1,495) for two months. Peloton CEO John Foley, while not referring to CNBC specifically, categorized “rumors that we are halting all production of bikes and Treads” as “false.”

So can Peloton be fixed? If the stock continues to slide, there may be more pressure on the company to restructure further, or potentially even look for a buyer. Peloton did not respond to requests for comment.

Peloton shares plunged more than 75% in 2021 as the once red-hot stock (it soared nearly 400% in 2020) spun out of control. The company has gone from being a pandemic-era stay-at-home darling to one that is constantly having to put out PR fires.

Product recalls have hurt the company’s image and its sales. The high prices for its equipment also don’t help. Competition from upstarts selling much cheaper bikes has eaten into sales, as not everyone that wants to work out is a wealthy suburbanite with plenty of disposable cash to spend.

 

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