Peloton shares plummet after recalling two million exercise bikes

Home exercise equipment maker Peloton said Thursday it was recalling more than two million exercise bikes, an announcement that sent its stock lower.

The company’s shares fell almost 9 percent at the close of trading and have plunged more than 20 percent this month.

The company had received 35 reports of seatposts breaking and detaching from the original model of the bike during use, according to a recall notice from the Consumer Product Safety Commission.

Peloton is voluntarily recalling model PL-01 bikes sold from January 201[ads1]8 to May 2023 in the United States and is offering customers replacements for the bikes’ seatposts that can be installed at home, the company said in a statement on its website Thursday. morning.

“For Peloton, it was important to proactively engage the CPSC to resolve this issue,” the company wrote. “We worked with them to identify today’s approved agent.”

The decision to recall the bikes is a reversal for Peloton, which has previously resisted recalling its equipment. In 2021, the company recalled its Tread+ and Tread treadmills after defying the Safety Commission’s warning that a child’s death and dozens of injuries had been linked to the equipment. John Foley, chief executive at the time, said the company had made a mistake by fighting the request to recall the treadmills.

In 2020, Peloton recalled pedals on about 27,000 bikes after receiving more than 100 reports of them breaking and 16 reports of damage.

Peloton has faced a number of other challenges in recent years. After emerging as a pandemic winner in 2020, when people bought their home gym equipment in droves, it has dealt with poor earnings, negative TV portrayals and cooling consumer demand.

Its current chief executive, Barry McCarthy, has been trying to turn the ship around since taking over last year for Mr Foley, a founder of the company. Mr. McCarthy has cut jobs, emphasized a subscription strategy and started an equipment resale program.

In his latest letter to shareholders, sent earlier this month, Mr. McCarthy said the company had settled an International Trade Commission dispute with Dish Network for $75 million and that subscriptions had grown 5 percent in the last quarter.

In that letter, he struck a cautiously optimistic note, saying the latest 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 over the next 12 months as we have in the last 12, we will have achieved something very special.”

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