During the COVID-19 pandemic, Peloton’s connected bike and treadmill became the “it” workout devices. Last quarter, the workout giant beat its revenue expectation by more than $34 million.
But the company is now on rocky footing. On Saturday, the U.S. Consumer Product Safety Commission issued a warning about the dangers of the Peloton Tread+ after a slew of injuries in small children, including one death, were reported.
“To date, CPSC is aware of 39 incidents including one death. CPSC staff believes the Peloton Tread+ poses serious risks to children for abrasions, fractures, and death. In light of multiple reports of children becoming entrapped, pinned, and pulled under the rear roller of the product, CPSC urges consumers with children at home to stop using the product immediately,” the CPSC wrote in a statement.
The CPSC warns consumers to stop using the machine if there is a small child or pet in the home. It goes on to advise consumers who do continue to use the product, despite the warning, to use it only in a locked room to prevent children and pets from interacting with the product.
Peloton shot back at the CPSC’s warning, stating that the organization’s release “is inaccurate and misleading.” The company stressed that the product is only meant to be used by individuals over the age of 16.
“Peloton was shocked and devastated to learn in March that a child died while using the Tread+. Within a day of learning this news, Peloton notified CPSC. While preparing its report to CPSC, Peloton learned through a doctor’s report to CPSC’s public database that a child had experienced a brain injury. Peloton spoke to the family who reported that and the child is expected to fully recover,” Peloton wrote in a statement.
Peloton claims that following these incidents it issued a reminder to Tread+ members to follow the safety instructions and keep the devices away from children and pets. The company also said it reminded users to remove the Safety Key. Without the Safety Key, the company said the device cannot be turned on.
According to Peloton, it reached out to make a joint safety announcement with the CPSC.
“Peloton invited CPSC to make a joint announcement about the danger of not following the warnings and safety instructions provided with the Tread+, and [Peloton CEO John] Foley asked to meet directly with CPSC,” the company wrote. “CPSC has unfairly characterized Peloton’s efforts to collaborate and to correct inaccuracies in CPSC’s press release as an attempt to delay. This could not be farther from the truth. The company already urged Members to follow all warnings and safety instructions.”
WHY IT MATTERS
News of the Peloton-related injuries has affected the company’s financials. Since the announcement, Peloton’s stock has seen a sharp drop. On Friday, it closed at $116 per share and is currently trading at $107.
In terms of what’s next, the CPSC said it plans to continue investigating all known incidents of injuries or death related to the Peloton Tread+. While Peloton urges users to follow its safety protocols, the CPSC said some of the injuries reported happened when a parent was using a treadmill, which suggests that the injuries can’t be avoided “by locking up the device when not in use.” But as of now, Peloton has not reported issuing a recall.
THE LARGER TREND
In 2019, Peloton went public with shares priced at $29 apiece. Since its IPO, the company’s stock price has continued to rise, hitting its peak around the start of 2021 with stock prices listed at around $165 per share.
Recently, Peloton has been looking into the M&A space. In December, the company bought Precor, a major manufacturer of commercial fitness equipment, for $420 million. According to Bloomberg reports, Peloton made three small acquisitions: AI voice assistant company Aiqudo in February, as well as fitness smartwatch maker Atlas Wearables and interactive workout mat Otari in the final quarter of last year.
Peloton isn’t the only connected fitness device on the market. Connected home rowing machine Hydrow has raked in $52 million in venture funding, and lululemon acquired Mirror, an in-home fitness-content-streaming platform, for $500 million.
