Peloton Will End In-House Manufacturing After Post-Pandemic Crash

July 14, 2022 Topic: Coronavirus Economy Region: United States Blog Brand: The Buzz Tags: PelotonTaiwanManufacturingTechnologyCOVID-19

Peloton Will End In-House Manufacturing After Post-Pandemic Crash

The news that it will contract a Taiwanese company to supply the bikes comes on the heels of a 92 percent decline in the company’s stock in just one year.


Few companies have fallen so far, so fast, as Peloton. The at-home bike company was riding high during the early days of the pandemic when lots of people were stuck at home and purchased the bikes. 

However, once the lockdown phase of the pandemic ended, Peloton couldn’t keep up with the momentum. This led to its CEO stepping down in February and the company raising prices on subscriptions in April. The company’s stock plunged 92 percent in just one year. 


Now, Peloton has announced another big change: it’s getting out of in-house manufacturing of its products. The company will expand its relationship with one particular supplier, the Taiwanese manufacturer Rexon Industrial Corp. 

The purpose of the deal, the company said in a statement, was to “simplify its supply chain and focus on technology and best-in-class content to continue driving the business forward as the leading global Connected Fitness company.”

"Today we take another significant step in simplifying our supply chain and variablizing our cost structure – a key priority for us. We believe that this along with other initiatives will enable us to continue reducing the cash burden on the business and increase our flexibility,” Peloton CEO Barry McCarthy said in the release. 

“Partnering with market-leading third-party suppliers, Peloton will be able to focus on what we do best – using technology and content to help our 7 million Members become the best versions of themselves,” he continued. 

“We are thrilled to be expanding our partnership with Rexon, a leading Taiwanese manufacturer with over 50 years of experience,” Peloton Chief Supply Chain Officer Andy Rendich said in the release. “Rexon has been with Peloton for many years and is a proven partner for our global operations. We plan to maintain a significant corporate and manufacturing presence in Taiwan with over 100 Peloton Taiwan team members who continue to play a key role in our engineering and manufacturing strategy,” he added.

There has been much speculation that Peloton could be an acquisition target. Blackwells, an activist investor in the company, had been pushing earlier this year for the company to explore a sale, and also for the CEO firing that eventually happened. 

“Despite the incontrovertible mismanagement of the Company, Peloton has a large and loyal customer base, skilled employees, great technology and content, and a respected brand. A stand-alone Peloton, however, will still not be able to fully exploit the opportunities its assets and brand enable – especially now with a pressured balance sheet, significant cash burn, and loss of investor confidence,” Blackwells said in a January letter. 

“The Board should immediately begin to explore these strategic alternatives and find a proper owner of Peloton who can make the most of its coveted employees, customer base, technology, and brand,” Blackwells demanded. 

Stephen Silver, a technology writer for The National Interest, is a journalist, essayist and film critic, who is also a contributor to The Philadelphia Inquirer, Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.

Image: Reuters.