Peloton shares slide after it recalled two million exercise bikes
Peloton, the maker of home exercise equipment, said Thursday it was recalling more than two million exercise bikes, an announcement that sent its stock down.
Shares of the company plunged nearly 9 percent at the close of the market and are down more than 20 percent this month.
The company had received 35 reports of seatposts breaking during use and becoming detached from the original model of its bike, according to a reminder message of the Consumer Product Safety Commission.
Peloton is voluntarily recalling Model PL-01 bicycles sold in the United States from January 2018 to May 2023, and will provide customers with replacements for the bicycle’s seatposts that can be installed at home, the company said in a statement. rack Thursday morning on its website.
“It was important for Peloton to proactively engage the CPSC to address this issue,” the company said. wrote. “We worked with them to identify the remedy approved today.”
The decision to recall the bikes is a sea change for Peloton, which has resisted the recall of its equipment in the past. In 2021, the company recalled its Tread+ and Tread treadmills after initially resisting the safety commission’s warning that the death of a child and dozens of injuries had been linked to the equipment. John Foley, the CEO at the time, said the company made a mistake in challenging the request to recall the treadmills.
In 2020, Peloton recalled pedals on approximately 27,000 bicycles after more than 100 reports of broken bicycles and 16 reports of injuries.
Peloton has faced a slew of other challenges in recent years. After emerging as a winner of the pandemic in 2020, when people flocked to buy its home gym equipment, it faced rocky revenues, negative television coverage and declining consumer demand.
Current CEO, Barry McCarthy, has been trying to turn things around since taking over from Mr. Foley, a founder of the company. Mr McCarthy has cut jobs, emphasized a subscription strategy and started an equipment resale program.
In his most recent letter to shareholders, sent earlier this month, Mr McCarthy said the company had settled Dispute International Trade Commission with Dish Network at $75 million, and that its subscriptions grew 5 percent in the most recent quarter.
In that letter, he made a cautiously optimistic comment, saying that the most recent quarter was the best since he took over as CEO. “There will be challenges and opportunities ahead,” he wrote, “but if we continue to perform in the next 12 months as we have performed for the past 12, we will have achieved something very special.”