Peloton plunges 15% after recalling treadmills amid reports of injuries and the death of a child

peloton tread

Peloton Interactive plunged as much as 15% on Wednesday after announcing it will voluntarily recall two versions of its treadmills. The decision comes in cooperation with the US Consumer Product Safety Commission following reports of injuries and one death.

Customers who have purchased either the Tread+ or the Tread treadmill are urged to stop using them and contact Peloton for a full refund, according to a joint statement issued by the company and the CPSC. The Tread+ costs $4,295 while it’s $2,495 for the Tread.

The agency on April 17 warned consumers about the Tread+. At that point, the agency was aware of 39 incidents, as well as one death. The agency on the same day even released a video of a child being sucked under the machine. To date, the accidents tally to more than 70.

The decision comes after Peloton initially pushed back on regulatory warnings regarding the safety of its treadmills.

“Peloton made a mistake in our initial response to the Consumer Product Safety Commission’s request that we recall the Tread+,” Peloton CEO John Foley said In a statement. “We should have engaged more productively with them from the outset. For that, I apologize.”

The agreement between the two parties was borne out of weeks of “intense” negotiation and effort, according to Robert Adler, acting chairman of the CPSC.

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US stocks close mixed as stimulus optimism clashes with new virus strain

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  • US stocks closed mixed on Tuesday after Congress passed a multitrillion-dollar spending bill that includes $900 billion in new stimulus.
  • The package, which also funds the government through September 30, includes $600 direct payments, $300 in additional federal unemployment benefits, and aid for small businesses. 
  • The fresh fiscal support locked horns with concerns around a new strain of COVID-19 in the UK. The variant’s emergence prompted several European nations to enact travel restrictions on UK visitors.
  • Oil futures fell as investors viewed the new virus strain as a risk to near-term energy demand. West Texas Intermediate crude fell as much as 2.4%, to $46.60 per barrel.
  • Watch major indexes update live here.

US equities closed mixed on Tuesday as investors weighed Monday’s stimulus vote against the emergence of a new coronavirus strain in the UK.

Congress approved the measure Monday night after months of negotiations over additional fiscal support. The bill, which includes $900 billion in new stimulus, funds the government through September 30. The package also includes $600 direct payments, $300 in additional federal unemployment benefits, and funds for the Paycheck Protection Program.

Here’s where US indexes stood at the 4 p.m. ET market close on Tuesday:

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The White House has indicated President Donald Trump will sign the bill. Economists have largely backed additional fiscal support, though the slowed pace of economic recovery and rising COVID-19 cases still present sizeable risks.

“The $900 billion fiscal aid package is months late and will likely fall short of what is needed to prevent a rough winter, but it’s better than nothing,” Gregory Daco, chief US economist at Oxford Economics, said, adding the measure will “partially buffer the current economic slowdown” while vaccines are distributed.

Enthusiasm toward the new fiscal support was somewhat offset by reports of a new COVID-19 variant in the UK. Several European countries implemented travel restrictions on UK visitors to slow its spread.

Fears were somewhat allayed later in the day after public health experts said Pfizer and Moderna’s COVID-19 vaccines are likely effective against the new strain. Still, the new restrictions and virus fears threaten to tamper down on already weakened economic activity.

Read more: Brooke de Boutray has beaten 99% of her peers over the last 5 years and runs a fund that is up 148% in 2020. She shared with us 4 stocks she’s most bullish on heading into 2021.

Economic indicators also flashed some warning signs. US consumer confidence unexpectedly fell to a four-month low this month as surging COVID-19 cases and stricter lockdown measures offset a slight improvement in Americans’ long-term outlooks, Conference Board said Tuesday. The organization’s sentiment gauge fell to 88.6 from 92.9, while economists expected a jump to 97.

The tech and real estate sectors outperformed, while communications-service and energy stocks lagged.

The Nasdaq composite index was lifted by Apple, which extended a late Monday climb following a Reuters report that the iPhone maker aims to produce electric cars by 2024. The news also boosted lidar-sensor producers, as Apple reportedly plans to partner with such firms for its vehicle systems.

Peloton soared after the company inked a deal to buy exercise-equipment company Precor for $420 million. Peloton plans to use Precor’s facilities to boost its manufacturing capacity and cut down on its order backlog.

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Bitcoin rose back above $23,000 after plunging the most in nearly a month on Monday. The cryptocurrency faced pressure after the US Treasury proposed rules that would require exchanges to collect information from users who transfer more than $10,000 to a crypto wallet.

Spot gold erased early gains and fell as much as 1%, to $1,858.97 per ounce, at intraday lows. The US dollar strengthened against all of its Group-of-10 peers and Treasury yields dipped.

Oil prices fell amid fears that the new COVID-19 strain will further cut into demand. West Texas Intermediate crude dropped as much as 2.4%, to $46.60 per barrel. Brent crude, oil’s international benchmark, declined 2.7%, to $49.56 per barrel, at intraday lows.

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Peloton slides 3% after Apple reveals its competing fitness service will launch on December 14

Peloton Bike smart stationary bike
Peloton Bike

  • Peloton fell as much as 3% on Tuesday after Apple revealed its rival Fitness+ service will debut on December 14.
  • The service allows iPhone, iPad, and Apple TV owners to access various exercise classes through their devices.
  • Fitness+ will cost $9.99 per month, undercutting Peloton’s cheapest $12.99-per-month subscription.
  • Peloton CEO John Foley said in September that Apple’s move into the segment is a “legitimization” of the industry, adding that Peloton can still stand out thanks to its exercise hardware.
  • Watch Peloton trade live here.

Peloton shares tumbled as much as 3% on Tuesday after Apple announced its rival fitness service will launch on December 14.

Apple’s service, named Fitness+, allows iPhone, iPad, and Apple TV users to access various exercise classes. Health statistics can be measured through Apple Watches and synced with the courses in real-time. Apple’s offering is the first major competitor for Peloton after the latter dominated the sector since debuting its first stationary bike in 2014.

Fitness+ undercuts Peloton’s own subscription service, coming in at $9.99 per month or $79.99 per year. Peloton’s offering, which can be accessed without one of its fitness products, starts at $12.99 per month.

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Peloton pared losses after opening lower. The company’s shares are up 319% year-to-date.

Peloton CEO John Foley said in September that Apple’s move into the segment is a “legitimization” of the fitness service industry. He added that Peloton stands apart from the iPhone maker in that it pairs fitness classes with its own exercise hardware.

“We think the special sauce, the magic, is our connected platforms, and in order to work out at home you need a stationary bike if you’re going to be biking, you need a treadmill if you’re going to be running,” Foley said in a September analyst presentation.

Fitness+ joins other services including Apple TV+, Apple Music, and Apple Arcade as part of the tech giant’s services push. Apple’s services arm has steadily grown in recent years and helped offset slowing iPhone sales. The company revealed a bundle deal named Apple One in October, and the option that includes Fitness+ comes in at $29.95 per month.

Peloton traded at $115.57 per share as of 10:35 a.m. ET Tuesday. The company has 48 “buy” ratings, four “hold” ratings, and one “sell” rating from analysts.

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