A new lawsuit has been filed on behalf of Peloton investors who are facing “significant losses” over Peloton’s handling of the recent seat post recall. The lawsuit was filed against Peloton as a company, as well as CEO Barry McCarthy, along with current & former CFOs Liz Coddington and Jill Woodworth.
The plaintiffs are hoping this lawsuit is granted class action lawsuit along with others who have lost money on Peloton stock, and the law firm is encouraging investors to contact them if Peloton shares were purchased between May 10, 2022 and May 10, 2023 and if “you suffered a significant loss on that investment.”
The case stems from the CPSC recall over the original Peloton Bike seat post that was issued on May 11, 2023. However, the lawsuit claims that Peloton had to of known of the impending recall and/or issues with the seat post, and that there was a chance of it negatively impacting the company’s financials.
After the recall news broke, “Peloton’s Class A common stock price fell $0.67 per share, or 8.9%, to close at $6.86 per share on May 11, 2023,” according to the complaint.
According to the press release, the lawsuit alleges Peloton “made materially false and/or misleading statements and/or failed to disclose material adverse facts about the Company’s business, operations, and compliance policies, including:”
“(i) the seat posts for certain of the Company’s Peloton Bikes were prone to break or otherwise detach during use, rendering them unsafe for users;
(ii) as a result, the Company was likely to recall millions of Peloton Bikes;
(iii) accordingly, Peloton overstated its efforts to enhance the safety of its products, understated its estimated future returns, and downplayed the Company’s need to book additional reserves for future product recall expenses; and
(iv) all the foregoing, once revealed, was likely to negatively impact the Company’s business and financial results and reputation.”
This is not the first time investors have brought legal action against Peloton; in November 2022, Peloton executives faced an alleged insider trading lawsuit from an investor, and in 2021, another class action lawsuit (which has now been dismissed) was brought about by a group of investors arguing that they were misled regarding product sustainability and demand during the pandemic.
This new case was filed in the US Eastern District of New York in early June, and is Solomon v Peloton Interactive.
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