Peloton shares plunge after CPSC recalls more than 2 million bikes
- The U.S. Consumer Product Safety Commission is recalling more than two million Peloton bikes for injury and fall concerns.
- Peloton shares tumbled Thursday.
- Peloton's stated intent to collaborate with the CPSC marks a change of tune for the company.
- The news arrives on the heels of a disappointing earnings report from Peloton.
Peloton shares tumbled Thursday after the U.S. Consumer Product Safety Commission said it is recalling 2.2 million of the company's bikes over injury and fall concerns.
The stock dropped nearly 9% on Thursday.
The seat post on Model Number PL01 bikes can detach and break unexpectedly during use, according to Peloton and the CPSC. Peloton has received 35 reports of unexpected seat breakages between January 2018 and this month. During that period, over two million units of the bike were sold in the U.S.
There were 12 reported injuries, including one wrist fracture, related to the part defect, according to an internal Peloton memo.
The recall does not affect bike owners in the United Kingdom, Germany or Australia, the company added.
"Our commitment to Member safety is unwavering," Peloton said in a statement. "For Peloton, it was important to proactively engage the CPSC to address this issue and to work swiftly and cooperatively to identify a remedy."
The New York-based company will offer free, updated seat posts to anyone using the recalled model. Peloton noted that while only 35 breaks were reported, all models of the bike in the U.S. could potentially have the issue.
The latest recall adds to a growing list of issues with Peloton's hardware. Peloton has disclosed several product recalls in recent years.
In 2021, the company halted sales on its Tread+ treadmill after a young child died after being swept under the treadmill. That product is still off the market and the company continues to issue refunds.
In past recalls, Peloton has expressed disagreement with the government when it identified potential flaws, and was slow to cooperate with officials. This time around, the company's stated intent to proactively collaborate with the CPSC marks a change of tune for the company.
In a memo sent to employees, Peloton said it took swift action for the relatively small number of affected bikes as part of its efforts to be a "member-first company." Peloton added it aims to work with regulators and follow their lead on safety matters.
The news comes a week after the company reported a wider-than-expected loss for its fiscal third quarter. Notably, Peloton also forecast its first-ever decline in subscribers, citing an uncertain economic environment.
Some analysts last week said the company had shown some signs of progress in its turnaround plan as it pushes new business initiatives.