Peloton's treadmill recall erases $4B in value on eve of exercise company's earnings release
Peloton shares have fallen 45% in 2021
Investors bailed out of Peloton shares after the company announced the voluntary recall of its Tread+ and treadmill products following the accidental death of a child.
The stock lost 14.5% in Wednesday's session which pulled its market value down by $4 billion to $24.3 billion, as tracked by Dow Jones Market Data Group. The interactive media company is set to report earnings after the close of trading on Thursday.
PELOTON'S TREADMILL RECALL: WHAT TO KNOW
The interactive exercise company, along with the U.S. Consumer Product Safety Commission (USCPS), warned against using the company's Tread+ machine following reports of the child's death and multiple injuries.
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Photographer: Michael Nagle/Bloomberg via Getty Images
CEO John Foley, who had previously pushed back against the USCPS in its safety concerns over the product, issued a mea culpa.
"I want to be clear, Peloton made a mistake in our initial response to the Consumer Product Safety Commission’s request that we recall the Tread+," Foley said. "We should have engaged more productively with them from the outset. For that, I apologize."
PELOTON, CONSUMER WATCHDOG SPAR OVER ALERT TO STOP USING TREADMILL AFTER CHILD'S DEATH, INJURIES
The recalls of around 125,000 units cover the $4,295 Tread+ and the $2,495 Tread treadmills.
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As for quarterly performance, analysts are expecting the company to post a loss of $0.11 compared with a $0.20 loss during the same period a year ago. Revenue is expected to jump to $1.1 billion, a marked improvement from the prior year.