Peloton sued over claims sales would continue rising
Florida pension fund aims to recover loses from maker of stationary bikes and treadmills
Peloton Interactive falsely assured investors its dramatic Covid-inspired sales surge would continue after the end of the pandemic, a Florida pension fund claimed in a lawsuit seeking to recover losses stemming from the company’s stock slump in the past year.
Instead of growing, sales of the company’s stationary bikes and treadmills started falling as the pandemic dragged on and its stock price sunk, wiping out billions of dollars of shareholder value, the fund claimed in the lawsuit, filed on Thursday in Manhattan federal court.
Lawyers for the pension fund of the city of Hialeah, Florida, said in the complaint that the company and its executives repeatedly told investors that a dramatic surge in sales in 2020 was not primarily due to Covid, but that the company’s growth and financial results were sustainable.
In one case, Peloton CEO John Foley told an investor the company’s results had “nothing to do with Covid” and instead were simply based on “a human need of, I want to get fit, I want fitness in my life in a consistent way,” according to the lawsuit.
In the proposed class-action lawsuit, the City of Hialeah Employees’ Retirement System seeks to represent all investors who acquired Peloton stock between December 9 2020 and November 4 2021.
Peloton did not immediately respond to a request for comment, sent after regular business hours.
Peloton’s stock price slumped in August after the company reported “material weakness” in financial reporting. It declined further in November when the company dropped its revenue guidance from $5.4bn to as low as $4.4bn.
That disclosure caused the stock to drop 35% in one day, “erasing $8.1bn in shareholder value,” according to the lawsuit.
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