Peloton is facing multiple federal probes over its reporting of injuries that occur on its at-home exercise equipment. The company confirmed the probes in filings, stating that both the Justice Department and Homeland Security have subpoenaed it for documents and other data related to injury reporting.
The Securities and Exchange Commission is also looking at whether Peloton was forthcoming enough with investors about safety reports that could impact the company. CNN earlier reported on the news.
Hits keep coming — The investigations come as Peloton’s stock price fell last week after it announced it would lower the price of its original connected exercise bicycle by 20 percent. It was necessary to do so in order to bring in more customers, who have more affordable at-home bikes available to them. But Peloton is simultaneously dealing with rising costs due to pandemic-related supply chain issues, and it has been increasing marketing spend to respond to the likes of Apple’s Fitness+ offering.
Back in May, Peloton was forced to take its Tread and Tread+ treadmills off the market after the Consumer Products Safety Commission pressured it to do so, citing the death of a child and 70 other injuries involving the treadmill. The agency said it was easy for children to activate the treadmills and get pulled under them. Peloton initially denied there was any cause for concern before it conceded and ordered a recall.
The Tread and Tread+ went back on sale recently following safety-related enhancements, but Peloton says it could have lost as much as $165 million as a consequence of the recall. Whereas Peloton used to be profitable, it is now loss-making and doesn’t expect to reach profitability again until 2023.
It’s the brand — Peloton arguably reinvented at-home fitness when it released its stationary bike, which features a touchscreen display and live, instructor-led classes (which can also be taken again after the fact as recorded classes) meant to imitate an in-person experience. It understandably boomed at the start of the pandemic and faced significant backlogs to fulfill orders.
People may be willing to forgive the safety recalls, but Peloton is also facing new entrants and a world that can see a day when the coronavirus pandemic is finally over. The brand has always been marketed towards the young and affluent — it’s aspirational. And Peloton will really have to lean on that marketing if it hopes to continue selling bikes and treadmills well into the future.