Peloton stages a rebound after stock plunge as the CEO says it is resetting production for sustainable growth

• Peloton stock rose Friday as the company said it's "right-sizing" its production of exercise equipment.
• Shares plunged 24% on Thursday after CNBC reported the company would pause production of bikes and treadmills.
• CEO John Foley said in a letter to employees that the company is also evaluating potential layoffs.

Peloton stock climbed Friday to recapture a portion of the previous session's steep loss, after the high-end exercise equipment maker acknowledged plans to adjust production.

Shares sank 24% Thursday to end at $24.22, the lowest finish since late March 2020. CNBC reported the company planned to temporarily halt production of its bikes and treadmills as consumer demand slowed and as the company aimed to control costs. The report cited internal Peloton documents obtained by CNBC.

In a letter to Peloton employees, CEO and co-founder John Foley denied the report that it planned to halt production. But he still signaled a slowdown.

"We feel good about right-sizing our production, and, as we evolve to more seasonal demand curves, we are resetting our production levels for sustainable growth," according to the letter dated January 20.

Shares rose 7.4% on Friday and were up by as much as 10% when they reached $26.67.

Foley also said in the latter that the company is considering whether it needs layoffs.

"In the past, 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," he wrote.

Peloton is "still in the process of considering all options" to make the business more flexible, he added.

He noted in the letter that Peloton is limited in what information it can share because as a public company it's in its pre-earnings "quiet period." The company, whose original bike has a starting price tag of $1,495, is slated to release fiscal second-quarter results on February 8.

Peloton in a separate release Thursday forecast second-quarter total revenue of about $1.14 billion, in line with its previous projection of $1.1 billion to $1.2 billion. It also expects to end the quarter with connected-fitness subscriptions of 2.77 million, which is lower than its previous guidance of 2.8 million to 2.85 million.

"As we discussed last quarter, we are taking significant corrective actions to improve our profitability outlook and optimize our costs across the company," Foley said in the second-quarter forecast.