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Peloton stock hits all-time low after company recalls more than 2 million bikes

Peloton (PTON) stock hit an all-time low on Friday morning, a day after the company recalled more than 2 million bikes for repairs.

Shares slipped nearly 2% in early trading after falling more than 7% on the news Thursday.

In a joint statement with the US 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.

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Shares hit an all-time high on Jan 13, 2021, at $167.42 and have stumbled since. The stock is down nearly 40% over the last month as 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 than the treadmill recall, 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.

A Peloton exercise bike is seen after the ringing of the opening bell for the company's IPO at the Nasdaq Market site in New York City, New York, U.S., September 26, 2019. REUTERS/Shannon Stapleton
A Peloton exercise bike is seen after the ringing of the opening bell for the company's IPO at the Nasdaq Market site in New York City, New York, U.S., September 26, 2019. REUTERS/Shannon Stapleton (Shannon Stapleton / Reuters)

Josh is a reporter for Yahoo Finance.

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