Peloton to Outsource Equipment Manufacturing

Peloton will stop making its own fitness equipment.

The latest development in an ongoing turnaround effort, the company plans to fully outsource manufacturing to cut costs and simplify its supply chain.

Hands off. Wanting to control every aspect of the experience, Peloton founder John Foley sought to vertically integrate content production, manufacturing… you name it. But, as the connected fitness company’s rough ride continues, its new CEO Barry McCarthy is off-loading equipment.

In a press release, Peloton said it’s “exiting all owned manufacturing” and will rely entirely on partners to make its hardware.

• The move will eliminate about 570 positions at Tonic Fitness Technology, a Taiwanese manufacturer acquired by Peloton in 2019.
• Earlier this year, Peloton canceled plans to build a $400M manufacturing plant in Northwest Ohio.

Righting the bike. Having misjudged demand for its home workout products, Peloton has changed out chief executives, cut 2,800 jobs, toyed with its pricing, and borrowed $750M as losses mount.

TBD. Down nearly 95% from its peak and 75% this year, Peloton’s stock rose on the news. But, when and how the company gets back on course remains a work in progress.