Shares of at-home fitness company Peloton fell Friday morning after the company revealed investigations into and lawsuits over its recalled treadmill model, blamed for dozens of injuries and the death of a child.
A Peloton store in Manhattan.
The at-home fitness company is being investigated by the Consumer Product Safety Commission (CPSC) over injuries suffered by its Tread+—which was recalled in May after a child died from being pulled under the treadmill—it revealed in a securities filing
Peloton shares slipped more than 9% Friday to $103.70, the stock's lowest price in nearly three months.
The departments of Justice and Homeland Security have also subpoenaed Peloton for documents to see if they properly reported the treadmill accidents, while the SEC is investigating whether it kept information about the accidents from investors.
Peloton revealed that five investors are suing them, some seeking class-action status, against the company’s leadership for allegedly lying to investors and mismanaging the company.
A Peloton user has also filed a lawsuit over the treadmill’s safety and is seeking class-action status.
The company declined to comment.
"This is as close to a disaster as a company can get,” Adam Crisafulli, financial analyst and founder of VItal Knowledge Media, said in an email. Peloton’s financial outlook, especially for the quarter ending September, is “horrible,” he said. While there is a “long list of [Covid-19] beneficiaries that are now experiencing some big hangovers,” the Peloton hangover may be among the largest.”
14.6%. That’s how much the company expects revenue to fall in the quarter ending September, according to a company filings.
Peloton's stellar stock performance last year took a sudden turn for the worse this spring after reports began surfacing about injuries on the company's treadmills. The CPSC warned consumers about the Tread+ in April. In May, the company recalled that treadmill and a less-expensive model, and CEO John Foley apologized for resisting the CPSC’s request that it recall the Tread+. Peloton will begin selling an updated Tread model on August 30.
Peloton Recalls All Tread Treadmills After A Death And Multiple Injuries (Forbes)
Peloton Recalls Treadmill After Weeks Of Resistance (Forbes)
Federal Regulator Warns Against Using Peloton Treadmill After Child Dies (Forbes)
Peloton Has Soared 350% In 2020. Here's Why The Stock Will Keep Rising This Year, According To Experts (Forbes)
If you continue to use this site we will assume that you are happy with it.