By Dhirendra Tripathi
Investing.com – Peloton stock (NASDAQ:PTON) fell nearly 10% in Friday’s premarket after the maker of connected exercise equipment said it had been subpoenaed by the Department of Justice and the Department of Homeland Security over injuries reportedly sustained by users of its treadmills.
The shares were already trading lower on news late Thursday that the company will slash the price of its Bike machine by $400, after posting a wider-than-expected loss in the quarter and warning of higher marketing costs.
The lowest-cost Peloton Bike will now sell for $1,495. The more expensive Bike+ stays at $2,495.
Peloton said the U.S. Securities and Exchanges Commission was also investigating the company's public disclosures related to the injuries. It has been named in several lawsuits associated with the recalls.
After much reluctance, Peloton had recalled both its treadmills, Tread and Tread+, in May over safety concerns, after reports of injuries and one death. There were also instances of the touchscreen falling off the Tread.
Peloton said Thursday the Consumer Product Safety Commission had approved its remedial action and it will relaunch Tread on Monday.
Peloton’s revenue in the fourth quarter rose 54% on-year to $937 million. Subscription revenue more than doubled. Cost of revenue more than doubled too, however, and overall expenses soared by more than two-and-a-half times, pulling the company into the red.
Revenue beat estimates but the adjusted loss per share was more than twice expectations.
The company expects $800 million revenue in the ongoing quarter and $5.4 billion in the year. The company said the first-quarter estimate includes the price reduction on Bike and a modest revenue contribution from Tread.