Peloton (PTON) stock slid on Thursday after the company recalled more than 2 million bikes for repairs.
In a joint statement with the U.S. Consumer Product Safety Commission (CPSC) Thursday, Peloton announced a “voluntary recall” of the Peloton original bike sold from January 2018 to May 2023.
“The seat post can break unexpectedly during use, creating a potential fall and injury risk,” the release said.
Peloton has received 35 reports of the seat post breaking and detaching from the post, which led to 13 injuries including a fractured wrist, lacerations and bruises, per the CPSC release.
Peloton shares fell more than 7% on the news. Shares are now down nearly 40% over the last month. The company recently warned of a potential subscriber dip in the current quarter.
The issue is isolated to the Peloton original Bike model and can be identified by its PL-01 model label on the bike, Peloton said. The company is offering free replacement seats that can be installed at home.
“Consumers should immediately stop using the recalled exercise bikes and contact Peloton for a free repair,” per the CPSC.
The recall isn’t Peloton’s first run in with the CPSC. In May 2021, Peloton recalled 125,000 Tread+ treadmills, following the death of a child and dozens of incidents reported to the CPSC.
Peloton’s stock tanked 15% on the news in 2021. Peloton paid a $19 million fine for the fatal treadmill incident, one of the largest civil penalties ever paid to the CPSC.
Part of the payment came because Peloton had fielded complaints from customers but didn’t inform the CPSC, according to a release from the agency.
Thursday’s recall will likely be different for the stock, though, according to BMO Capital Markets equity analyst Simeon Siegel. While shares declined on the initial news, the actual expense to the company is expected to be materially different.
In the case of the treadmill, Peloton fully refunded customers. With Thursday’s bike recall, the company will only be shipping out new bike seats, which Siegel notes is “apples and oranges versus memories of the last recall.”
“(The recall is) clearly negative, but we believe this headline may appear scarier than the actual announcement,” Siegel wrote in a note on Thursday.
Siegel also notes Peloton is working with the CPSC to resolve the issue, which wasn’t the initial case during the treadmill recall.
Josh is a reporter for Yahoo Finance.