Pelotongate has come to Wall Street.
The exercise equipment company’s stock is down $7.51, or 6.46%, to $108.70 per share in mid-morning trading, after the U.S. Consumer Product Safety Commission issued a warning about the Peloton Tread+. The agency received reports of 39 incidents in which small children or pets were injured; one child died.
The CPSC’s announcement came on Saturday when the markets were closed. They re-opened for the first time at 9:30 a.m. ET today. Peloton is traded on the Nasdaq-GS.
“CPSC staff believes the Peloton Tread+ poses serious risks to children for abrasions, fractures, and death. In light of multiple reports of children becoming entrapped, pinned, and pulled under the rear roller of the product, CPSC urges consumers with children at home to stop using the product immediately,” the commission says.
But the New York-based business refutes the CPSC’s claim, calling it “inaccurate and misleading,” and has not issued a recall for the connected treadmill.
“There is no reason to stop using the Tread+, as long as all warnings and safety instructions are followed,” Peloton said in a statement. “Children under 16 should never use the Tread+, and Members should keep children, pets, and objects away from the Tread+ at all times.”
The company is best known for its connected spin bicycles, which saw a huge spike in popularity during the COVID-19 pandemic as fitness fans, unable to work at gyms, wanted the at-home bike to help them stay in shape on their own. Its stock price surged and earnings were high.
For walkers, joggers, and runners who will continue to work out on the Tread+, the CPSC advises using it only in a locked room, keeping all equipment away form the treadmill, unplugging it when not in use, and keeping the safety key away from the machine and kids.
Peloton also has reminded its members to follow the company’s safety warnings and instructions and to remove the safety key when no one is using the treadmill. It also has Peloton instructors in classes reminding members keep kids, animals, and equipment away from the treadmill during workouts and to remove and hide the safety key.
“Peloton was shocked and devastated to learn in March that a child died while using the Tread+,” the company’s statement reads. “While Peloton knows that the Tread+ is safe for the home when used in accordance with warnings and safety instructions, the company is committed to taking whatever steps are necessary and appropriate to further inform Members of potential risks and remind them of measures they need to take to safeguard themselves and others in their households. Peloton will also continue to work to develop industry-leading safety features for connected home exercise equipment.”
The company says it’s tried unsuccessfully to work with the CPSC on this issue and has shared information about incidents it knows of.
The CPSC warning is for Peloton’s Model No. TR-01, which was called Tread from August 2018 to September 2020 and then renamed Tread+.
Cofounded in 2012 by CEO John Foley, Peloton went public in September 2019, six months before the pandemic began. It was a Fast Company Most Innovative Company in 2016, 2017, 2018, and 2019.