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Peloton shares down 15% as company recalled all its treadmills

6 May 2021
3334
2 min.
2
Peloton shares down 15% as company recalled all its treadmills

Peloton business

Peloton has recalled all of its treadmills, which generate the biggest revenue stream, due to an accident in which a child died and dozens were injured. Analysts are giving different forecasts for Peloton stock.

Peloton (PTON) shares fell to a 10-month low on Wednesday, with the company losing about $4 billion in market value in just one day. As of Wednesday's close of trading, Peloton had a capitalisation of $24.5bn.

The reason is the fitness company's management's decision to recall all of its Tread treadmills due to child injuries and one death. According to a company statement, owners of the treadmills must contact Peloton for its return and full compensation by November 2022.

The instructions for the treadmills include measures to ensure that children or animals cannot accidentally turn it on (the safety key is taken out and stored away from the Tread for this purpose).

Peloton shares have fallen more than 30% since 18 March on the back of the news.

Peloton received a request from the US Consumer Product Safety Commission (CPSC) to recall the treadmills back on 18 March, but has refused, indicating it will challenge the decision in court.

The treadmills are Peloton's most expensive piece of fitness equipment, which also makes money from sales of exercise bikes and an online fitness subscription service.

During the COVID-19 pandemic, especially in the second half of 2020, Peloton shares rose sharply as the company saw a boom in demand for its products and service in closed gyms and fitness facilities.

The company has been unable to meet demand for its fitness equipment and has done the hard work to increase production, with the recently launched cheaper Tread model exceeding sales expectations in the UK.

With the current situation with Peloton's safety investigation into its fitness equipment, the company finds itself in limbo.

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