Peloton stock plunges 25% as company halts Bike production

Shares of Peloton fell sharply in intraday trades on Thursday as the company reportedly halted the production of its bike

 The plunge came after the company was also said to have hiked prices due to inflation.

Peloton stock declined by 25% on Thursday as the company hit negative sentiment following news that it had decided to hike prices as well as halt demand for its bikes and treadmill.

By the close of markets, the stock was at $24.07 after having touched intraday highs of $32.64 and lows of $23.25. Today's low is the stock's lowest price level in over a year. 

The decline to the 52-week price low meant the Peloton shares had crashed past the company’s IPO price. During the 2019 public listing, the stock was floated at $29 per share. 

As a result, Peloton’s market cap has shrunk to around $8.3 billion, nearly 85% down since the rally to the record price of $166.57 in December 2020. At the time, its market capitalisation stood around $50 billion.

With the previous close for the PTON stock at $31.84, the declines leave the Nasdaq-listed company nearly 27% down year-to-date.

Competition and inflation add to the headwinds

Thursday’s crash for the stock came after reports that the company was facing increased competition, with demand for the products decreasing sharply over the past several months. The company also cited inflation as one of the main reasons for the price hikes that have seen customers seek alternatives.

Peloton announced it would be pausing the production of the Bike over the next two months, with the decision following an earlier that saw the firm stop the Bike+ production until June.

The PTON share price has declined over the last three weeks due to the broader rot in the stock market, with investors concerned about Fed interest rate hikes contributing to Nasdaq’s plunge into correction this week.

While the US market traded higher on the day, there are still jitters across the board and industry experts suggest the pain is not over yet.

JPMorgan strategist Hugh Gimber told Insider on Thursday that the markets are likely to see more declines, with tech stocks facing the most pain.