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Peloton Interactive Inc. lost around 20,000 subscribers, and this caused its stock price to dive sharply. The cancellation of subscriptions happened at a time when customers were waiting for their recalled exercise bikes to be repaired.
The fall of the stock was apparently due to the previous bike recall, where the seats of the equipment needed to be replaced. Unfortunately, thousands of users have already cut their subscription plans with Peloton while waiting for the repair.
As per CNN Business, the exercise equipment and media company based in New York City has recalled more than two million bikes, citing flaws with the adjustable seat. This problem caused so much trouble for the company, and the extent of the issue was very unexpected.
It was reported that due to the cancellations, shares of Peloton Interactive quickly plunged by 20% in early trading on Wednesday, Aug. 23. The result comes after another disappointing earnings report recently.
The fall was also attributed to the fitness company’s incurred losses brought about by the recall. The company said the amount spent for the recall “substantially exceeded” the exercise equipment maker’s expectations. Peloton revealed the cost was $40 million, and on top of this, 20,000 members have decided to halt their monthly subscriptions since they were waiting for their bikes to be fixed.
“The slowdown exceeded our expectations through May and through the first three weeks of June as consumer spending shifted toward travel and experiences,” Peloton’s chief executive officer, Barry McCarthy, stated in a letter sent to investors. “Then eight weeks ago the trend reversed itself, and we began to see a reacceleration in hardware sales.”
Meanwhile, Peloton said it already received about 750,000 requests for bike seat replacements, and this number surprised the company. Fox Business reported that at this time, Peloton was only able to repair 340,000 units, but it looks to fix the rest by the end of September.
Photo by: GStock Studio/Vecteezy
