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Peloton Interactive recalled 2.2 million bikes Thursday morning over a safety issue with the bikes’ seat, sending the at-home exercise company’s shares plummeting to a seven-month low, the company’s latest recall as its financial woes continue, following four rounds of layoffs last year.
Key Facts
Peloton’s shares fell 7.1% to $7.01 early Thursday, marking a 13.8% dip since the start of the year and a 95% drop since its December 2020 peak.
The recall applies to Peloton’s Model PL01 stationary bike, the Consumer Product Safety Commission announced, warning users of “fall and injury hazards” stemming from reports the bike’s seat post can break while in use.
Peloton, which has struggled since sales surged in the early months of the Covid-19 pandemic when gyms were largely shut down, had received 35 complaints from customers, including 13 that said they were injured as a result of the faulty seat.
The CPSC urged Peloton users to “immediately stop” riding the recalled bike and contact the company, which is offering affected customers a free self-installed seat post.
Big Number
$1,400. That’s the price of Peloton’s Model PL01 at-home bike, which it sold at its own stores, online and at Dick’s Sporting Goods starting in January 2018, according to the CPSC.
Key Background
Peloton was founded in 2012 as an alternative to trendy spin classes, offering consumers a subscription package with streaming classes they could watch on a monitor attached to the bike. Sales skyrocketed in 2020 as consumers looked for ways to stay active at home during Covid-era lockdowns, reporting a quarterly increase of 172% in September 2020, while its stocks surged to a high of $162.72 that December. Since its pandemic boom, however, Peloton has struggled with declining sales and multiple recalls, including a May 2021 recall of its Tread+ treadmill after a child died from being pulled underneath the machine (Peloton gave customers full refunds and later introduced additional safety measures on its machines). The company also underwent four separate rounds of layoffs last year, including one round of cuts last February affecting more than 2,800 employees.
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