Peloton (PTON) Plunges After Recalling All Treadmills, Analyst Says Will Negatively Impact Broader Tread Rollout
- Dow, S&P post worst week in months after hawkish Fed spooks investors
- Fed-fueled dollar rises as bears make for exits
- Adobe (ADBE) Edges Higher After Topping Q2 Estimates, Analysts Raise PT on 'Impressive' Performance
- Fed Statement Very Bullish for Tech Stocks, Focus on Cloud and Cyber Stocks - Wedbush
- You Fight Real Physical Inflation With Rate Hikes, Not Talk of Rate Hikes; Buy the Dip in Commodities, Gold Underpriced - Goldman Sachs
Get instant alerts when news breaks on your stocks. Claim your 1-week free trial to StreetInsider Premium here.
Shares of Peloton (NASDAQ: PTON) are down 13.5% in today’s trading session after the company, and the U.S. Consumer Product Safety Commission (CPSC), made two separate voluntary recalls of Peloton’s Tread+ and Tread treadmills.
The company instructed owners of these products to “stop using it” immediately and “contact Peloton for a full refund or other qualified remedy.” Peloton admitted it made a mistake in the initial response to CPSC.
“I am pleased that the U.S. Consumer Product Safety Commission and Peloton have come to an agreement to protect users of the Peloton Tread+ and Tread products. The agreement, which the Commission voted this morning to accept, requires Peloton to immediately stop selling and distributing both the Tread+ and Tread products in the United States and refund the full purchase price to consumers who wish to return their treadmills,” Robert Adler, Acting Chairman of the CPSC, said in a statement.
“The agreement between CPSC and Peloton is the result of weeks of intense negotiation and effort, culminating in a cooperative agreement that I believe serves the best interests of Peloton and of consumers. I would like to thank the CPSC technical staff who have worked tirelessly to protect consumers and to warn the public. Today we have taken steps to prevent further harm from these two products.”
John Foley, CEO of Peloton, apologized for ignoring initial recommendations from CPSC.
“Today’s announcement reflects our recognition that, by working closely with the CPSC, we can increase safety awareness for our Members. We believe strongly in the future of at-home connected fitness and are committed to work with the CPSC to set new industry safety standards for treadmills. We have a desire and a responsibility to be an industry leader in product safety.”
Edward Yruma, an analyst at KeyBanc, said the latest developments will weigh on Peloton going forward.
“We think that the solution on Tread may be simpler (perhaps some kind of guard + software lockout) while the high running surface of the Tread+ may require a more substantive fix. We believe this will negatively impact the timing of the broader rollout of Tread (previously scheduled for May 27). Moreover, this may have other unquantifiable impacts to long-term demand. Our estimates are under review pending the 3Q21 earnings call tomorrow,” the analyst said in a memo sent to clients shortly after Peloton’s announcement.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Bragar Eagel & Squire, P.C. Reminds Investors That Class Action Lawsuits Have Been Filed Against Peloton, ChemoCentryx, and AcelRx and Encourages Investors to Contact the Firm
- Kroger lifts annual forecasts as online grocery investments click
- HKBN Ltd. (1310:HK) (HKBNF) PT Lowered to HK$13.20 at HSBC
Create E-mail Alert Related CategoriesAnalyst Comments, Trader Talk
Related EntitiesKeyBanc, Earnings
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!