Exercise media and treadmill producer Peloton
The Department of Justice (DoJ) and Department of Homeland Security (DHS) have respectively tapped the treadmill manufacturer for documents relating to the string of user-reported injuries earlier this year, the company revealed in its recent 10-K filing. Under "Risks Related to Laws, Regulation, and Legal Proceedings," Peloton further notes that it is also facing an additional probe by the Securities Exchange Commission (SEC), which is investigating the company's reporting of information. In addition, Peloton has faced intense scrutiny with the Consumer Product Safety Commission (CPSC), as well as a torrent of litigation from the dozens of user injuries reported to the watchdog.
Peloton's legal predicament stems from a string of user injuries reported to the CPSC, with at least 72 injuries reported to the commission and one confirmed death of a young child after being pulled under the machine. The company would subsequently issue a recall, but only after intense pressure from regulators and mounting litigation from injured users.
The Friday revelation followed Peloton's Tuesday announcement that it would begin selling its controversy-marred Tread product once again. However, the Tuesday reveal might have already been ruined by the Thursday posting of Peloton's Q2 results, which included slowing sales and a $400 price cut to the company's Bike product.
Looking back to Peloton's 10-K, it would seem that the mountain of litigation the company is facing may have played into its pricing decision quite considerably.
"The results of litigation, investigations, claims and regulatory proceedings cannot be predicted with certainty, and determining reserves for pending litigation and other legal and regulatory matters requires significant judgment. There can be no assurance that our expectations will prove correct, and even if these matters are resolved in our favor or without significant cash settlements, these matters, and the time and resources necessary to litigate or resolve them, could harm our business, financial condition, and operating results," the firm wrote.
Friday was a bad day for Peloton investors, with the firm sliding 5.4% pre-market before losing an additional 3.4% during the day's trading. The Friday losses brought Peloton down to a dollar below its opening price on Monday, effectively erasing the week's progress.
- https://investor.onepeloton.com/node/8586/html
- https://www.pws.io/stop-using-peloton-tread-says-cpsc-following-childs-death
- https://investor.onepeloton.com/news-releases/news-release-details/peloton-tread-will-be-available-us-canada-and-uk-august-30
- https://www.reuters.com/business/peloton-gets-subpoenas-doj-dhs-over-injuries-products-2021-08-27/
- https://www.cnbc.com/2021/08/27/peloton-subpoenaed-by-doj-dhs-over-treadmill-injuries.html
- https://www.cnbc.com/2021/08/29/peloton-investors-face-new-reality-as-bike-makers-costs-hurt-profits.html