Wednesday 05 May 2021
Share collapses by ten percent
Peloton is withdrawing treadmills
Just a few weeks ago, Peloton denied problems with its treadmills, but now the company is calling them all back. The possible risk of injury is too great, and a child is said to have died in an accident. The stock collapses, but the company faces even greater trouble.
The fitness equipment supplier Peloton particularly benefited from the Corona crisis. After a series of accidents, the US company is now recalling its two treadmill models. What is explosive is that in mid-April the company initially rejected a warning from the US consumer protection agency CPSC about its treadmills. Now Peloton boss John Foley said to the contradiction at the time “Peloton made a mistake”, for which he apologizes.
In Germany, Peloton does not sell the treadmills, but restricts itself to its training bikes. The Peloton share fell after the recall message in early US trading at times by more than ten percent to just under $ 87. Since the first warnings became known, the share has lost around a quarter of its value.
The $ 4,300 Tread + model hit the headlines in March when news broke of the death of a six-year-old child who was pulled under the carpet on the treadmill. A few weeks later, the CPSC reported 72 accidents, 29 of them involving children. There were abrasions, broken bones and open injuries. A total of 125,000 devices of the model are said to be affected by the recall. With the somewhat cheaper “Tread” model, the screen could break off and injure the user, warned Peloton and the CPSC. Here, too, 1050 devices are returned to the manufacturer. Customers should stop using both devices immediately.
The first class actions have been filed
The company is threatened with a wave of lawsuits. A number of law firms are already rounding up clients for mass proceedings, and the first class actions have already been filed in US courts. In addition to affected customers, law firms are also calling on shareholders to participate in the proceedings in order to sue for compensation for price losses allegedly caused by the security deficiencies.
Peloton had grown rapidly in the corona pandemic due to closed gyms and cracked the one billion dollar mark in sales in the Christmas quarter. The company even couldn’t keep up with the deliveries and took 100 million dollars in hand in order to reduce the “unacceptable” waiting times with faster transport by plane and ship.