Avoid Peloton Interactive (PTON).
Earlier this year, the stock plunged after the company recalled all treadmills on reports of injuries, and a death. “The company is advising customers who already have either the Tread or Tread+ products to immediately stop using the equipment and contact Peloton for a full refund or other qualified remedy,” says CNBC.
At the time, this was a major reversal for the company.
Weeks prior, the Consumer Safety Commission urged the public to stop using the company’s treadmills in homes with small children. In response, Peloton said the Commission’s report was “inaccurate and misleading,” adding there was no reason to stop using the treadmills.
Then, CEO John Foley said, “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+. We should have engaged more productively with them from the outset. For that, I apologize.”
While shares of PTON would explode higher once the smoke cleared, the stock is plunging again. All after the U.S. Department of Homeland Security and the U.S. Department of Justice issued subpoenas against the company on its reporting of product-related injuries. In addition, according to The Wall Street Journal, the company added, “the SEC is investigating the company’s public disclosures over these issues.”
Not only will the company cooperate with the investigations, it lowered the price of its Bike again, cutting the price by another 20%, according to CNBC. “By doing so, the company said it hopes to reach new customers who weren’t previously able to afford its cycles.”
But wait, it gets worse.
Not only did the company post poor earnings, and guide lower, “The company separately disclosed it found a problem with the way it has been accounting for inventory. An audit of fiscal 2021, which ended on June 30, discovered a ‘material weakness’ in the internal controls that govern Peloton’s financial reporting. It will not, however, result in the restatement of any of its past results,” as also reported by CNBC.
Yeesh…. We would not want to be the CEO of PTON these days.