Peloton Reveals It Is Subject Of Three Additional Federal Investigations

Peloton Interactive Inc PTON has acknowledged it is the subject of three previously unannounced federal investigations into reports on injuries by users of the company’s treadmill machines.

What Happened: The company announced the increased investigatory attention on page 31 of its 118-page 10-K filing with the U.S. Securities and Exchange Commission (SEC).

“In addition, the DOJ [Department of Justice] and U.S. Department of Homeland Security ("DHS") have subpoenaed us for documents and other information related to our reporting of the injuries associated with our products and the SEC is also investigating our public disclosures concerning these matters,” said the company.

Peloton added that it has been the subject of an investigation by the Consumer Product Safety Commission, an independent agency of the federal government, since April when that agency “unilaterally issued a warning to consumers about the safety hazards associated with the Tread+ and is continuing to investigate the matter.” The company also stated it has “also been named in several lawsuits” related to its products.

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Why It Happened: The CPSC investigation is linked to a report from March that cited one child who died and dozens of customers injured on the company’s Tread+ machine. The injured customers experienced broken bones and head trauma after being trapped beneath the equipment, which retails for $4,295.

Peloton initially dismissed the CPSC’s information as "inaccurate and misleading," but in May announced the recall of its Tread and Tread+ machines.

In its latest quarterly earnings report published on Thursday, Peloton posted a net loss of $313.2 million, or $1.05 per share, a significant tumble from the net income of $89.1 million, or 27 cents a share, post one year earlier. The company partly blamed the product recall for the poor quarterly showing.

PTON Price Action: At last check Friday morning, Peloton was trading at $104.15; its 52-week trading range is $72.11 to $171.09.

Photo: Courtesy Peloton