Calling the change “natural progress” in a statement Tuesday, Peloton said Taiwanese manufacturer Rexon Industrial Corp. will become the main manufacturer of exercise equipment in the future. As a result, Peloton will close its factories owned by Tonic Fitness Technology, a company it bought in 2019.
“We believe this, along with other initiatives, will allow us to continue to reduce the cash burden on the business and increase our flexibility,” CEO Barry McCarthy said in a press release.
Other items of equipment, including touch screens and a future rowing machine, will also be outsourced.
In May, Peloton said it only had $879 million in cash in the bank at the end of the quarter, making it “undercapitalized,” McCarthy said. This forced the company to borrow $750 million in five-year debt from Wall Street in order to continue its operations.
Peloton shares rose about 1% in early trading. Shares are down about 95% from their all-time high hit at the end of 2020.