Peloton Interactive Inc (NASDAQ: PTON) CEO John Foley on Thursday addressed what he called a “flurry of speculative articles” in the press regarding the company pausing production of its bike and treadmill products.
What Happened: In a letter to his employees, first noted on Business Insider, Foley said he was saddened that Peloton employees read things without “clarity and context” that they deserve.
“This week, we’ve experienced leaks containing confidential information that have led to a flurry of speculative articles in the press. The information the media has obtained is incomplete, out of context, and not reflective of Peloton’s strategy,” wrote Foley.
“Rumors that we are halting all production of bikes and Treads are false.” He went on to state that “Connected Fitness is here to stay,” he added.
Foley pointed out that the company feels “good” about “right-sizing our production” as it evolves to more seasonal demand curves.
“We are resetting our production levels for sustainable growth,” the CEO said.
On Thursday, in the regular session, Peloton shares dropped 22.9% to $24.22. The shares rose 2.3% in the after-hours trading to $24.77.
See Also: How To Buy Peloton (PTON) Stock
Why It Matters: It was reported Thursday that Peloton is temporarily halting production of its Peloton Bike and Peloton Tread for six weeks and does not expect to make any Tread+ machines in 2022.
Addressing layoffs in his letter, Foley wrote, “We’ve said layoffs would be the absolute last lever we would ever hope to pull. However, we now need to evaluate our organization structure and size of our team, with the utmost care and compassion.”
Peloton’s quarterly sales topped $1 billion for the very first time last year amid the raging COVID-19 pandemic that encouraged a trend of fitness at home.
Foley said the company has identified a leaker and Peloton is moving forward with the “appropriate legal action.”
As per the company’s first-quarter earnings, Peloton’s loss per share amounted to $1.25 as against the estimated loss per share of $1.07 in November. Revenue came in at $805.2 million against the estimate of $810.7 million in the period.
Read Next: Is Peloton Stock Overvalued Or Undervalued?
Photo: Courtesy of Peloton
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.