Calling the change a “natural progression” in a statement Tuesday, Peloton said Taiwanese manufacturer Rexon Industrial Corp. will become the primary manufacturer of its exercise equipment in the future. As a result, Peloton will shut down its factories operated by Tonic Fitness Technology, a company it bought in 2019.
“We believe that this along with other initiatives will enable us to continue reducing the cash burden on the business and increase our flexibility,” said CEO Barry McCarthy in a press release.
Other pieces of its equipment, including touchscreens and an upcoming rowing machine, will also be outsourced.
Peloton said in May that it had just $879 million in cash in the bank at the end of the quarter, which has left it “thinly capitalized,” McCarthy said. That forced the company to borrow $750 million in five-year term debt from Wall Street to keep its operations running.
Peloton shares rose about 1% in early trading. The stock is down about 95% from the all-time high it reached in late 2020.