Peloton stock falls after recalls tied to faulty bike seats

Yahoo Finance Live discusses a fall in shares of Peloton after 2.2 million bikes were recalled by the company due to an issue with faulty bike seats.

Video transcript

- Well, one training ticker that we are watching-- it's a frequent one. Peloton shares are tanking this morning. The company doing another recall.

We're talking about 2.2 million bikes being recalled because of an issue with the bike seat. Peloton received 35 reports of the seat breaking and detaching from the bike during use, including 13 reports of injuries. The company is telling customers to contact Peloton for a free repair.

But obviously, this is just the latest issue for this company. Its experienced recalls with its treads, its treadmills. And now it's hard to imagine you're on the bike and the seat falls off.

- Yeah, 2.2 million units here as you were mentioning. And this was issued by the Consumer Product Safety Commission here. And they went on and talked about how the bike seat, the post seats, can basically break during use. You can have a fall, injury, hazard to the user there.

And this is another recall in a string of recalls that had taken place previously for the Tread Plus model. You had seen that where it was possible for pets or even small children to be able to unfortunately--

- To get stuck underneath.

- --get stuck underneath of that and have serious injury. And so all of that considered, on the connected device front where Peloton, rather, has had to take steps to either get some of those connected devices into an experience like a hotel or into other wholesale partners to get that into homes then, and had to even deal with the secondary market, this is just another hit on a bike that is largely probably in the secondary market right now. So can diminish not just future sales for Peloton of this if they are kind of refurbishing and then putting back out into the market but then additionally just a broader hit in a string of hazardous situations that they've had to navigate.

- Yeah, [INAUDIBLE]. One thing I will say that is quite different now with this recall versus the prior management and the tread recall, remember we had that whole back and forth where Peloton was sort of resisting the calls for a recall, was resisting the allegations that it was hurting people, right, and that the recall was necessary? This one seems to be-- these recalls are all technically voluntary. It seems like the company is cooperating from what we can tell with this one. So a different tone, certainly, and more proactive I think you could argue.

- Coperating.

- As we get-- we need to get more information. But it seems like that's the case.

- Yeah, I mean, I hadn't seen anything on their investor relations site, on their own home page.

- They're letting the CPSC handle this one I guess.