Safety investigation
Peloton is facing pressure from the US Consumer Product Safety Commission (CPSC) as several children have been injured and one child has died due to an accident involving Peloton Tread treadmills. Peloton says the treadmills are safe when used in accordance with the instructions.
Peloton (PTON) shares fell 6.6% on Monday before trading opened as the company, which sells fitness equipment, bikes and treadmills, received a request from the US Consumer Product Safety Commission (CPSC) to recall Peloton Tread treadmills due to accidents involving children.
The regulator said it was aware of 39 incidents, including one fatality, and an investigation was underway. The CPSC has also demanded that Peloton provide details of the injured parties.
Peloton issued two press releases on its website saying that as soon as the company became aware of accidents involving children and one fatality, it immediately reported it to the CPSC and has since cooperated with the regulator by responding to all requests. The exception to this was the provision of confidential data of the injured parties, but this was solely due to their willingness.
Management said it would only provide this type of information with the consent of the participant or pursuant to a subpoena. Peloton offered its condolences to the families of the victims, but pointed out that the Tread treadmills have passed all necessary tests and are safe if used in accordance with the safety instructions.
Peloton has thus refused to stop selling or recalling the Tread Peloton, which went public on the NASDAQ in September 2019, saw huge growth in the second half of 2020 as consumers bought its fitness equipment at home and paid subscriptions for fitness classes online due to quarantine restrictions and closed gyms.
Peloton shares have fallen 23.4% since the start of 2021, with investors worried, among other things, that the company's sales will fall amid mass vaccination and reduced quarantine restrictions.
Peloton had a market capitalisation of $35.3bn at the close of trading on Friday, up a still substantial 219.7% over the past 12 months.
