Peloton’s stock was down nearly 15 percent Wednesday, wiping $4.1 billion off the company’s market valuation in just a single day. The setback came after the company apologized for not voluntarily recalling its treadmill machines over safety concerns soon enough.
The company’s market cap has declined by a stunning $7.4 billion since the day its chief executive John Foley revealed that an accident related to its treadmill led to the death of a child. The connected equipment manufacturer has since been stuck in a back and forth with the U.S. Consumer Product Safety Commission over the safety of its equipment and dozens of injuries reported in recent months, CNBC reported.
The decline comes after a year of record growth for Peloton. When lockdown measures went into effect in 2020, consumers turned to buying at-home fitness equipment en masse, leading Peloton’s stock to surge by more than 400 percent. The company was valued at $49 billion at its peak in mid-January.
This year, however, has been remarkably different. The company has seen its stock decline by 45 percent — a trend that other players such as Netflix and Zoom have also observed since the start of this year.
“We view this as another sign that Peloton’s voice and platform grew faster than its business, and it is still working to grow into its fame,” said BMO Capital Markets analyst Simeon Siegel. “With a still ~$30 billion market cap … Peloton’s market value looms much larger than its expected results.”
“We believe one can argue more of Peloton’s market value has been created by its marketing department than by its engineers or instructors,” Siegel added.
Some analysts, however, see this decline as an opportunity to invest in the company.
“In the years ahead, we will recall this moment in Peloton history as the proverbial buying opportunity,” Stifel’s Scott Devitt told CNBC.