It’s the statement that every hardware company hates to hear; their products are unsafe.
However, for Peloton (NASDAQ: PTON) and its latest product safety issues, it may be a case of just getting used to it.
Should Peloton investors be concerned?
When the Consumer Product Safety Commission (CPSC) warns customers not to use Peloton Tread+ treadmills with children or pets nearby, there’s always going to be some concern.
The announcement came one month after Peloton itself disclosed an accident involving the treadmill that resulted in the tragic death of a child. The U.S. agency cited 39 further incidents, including one death. The warning could add to challenges for the company as it looks to expand its business by selling running systems with online content.
Such is the nature of being a hardware company with many — literally — moving parts.
Peloton may be a subscription-first business, but these are the consequences that will naturally result from expansion and innovation. Let’s take a look at another popular ‘hardware’ company that has A LOT of safety issues right now: Tesla.
At least 200,000 Tesla models have been recalled in 2021 already, with numerous suits being filed against it for safety reasons, usually tied to its self-driving features. And although these are costly issues, they are also not out of place in the automotive industry, and Tesla is still smashing records and is worth more than $700 billion.
While Peloton is no Tesla — yet — it is a hardware producer, and thus, it will have problems. I am not at all concerned about the CPSC’s warnings, as they won’t be the last. Peloton is still a great business, and unless they refuse to fix their problems, I am not concerned about its longevity.
Investors should not be spooked by this warning, and consider any dip a unique discount buying opportunity.
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MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.
Content Manager at MyWallSt
Jamie is the Content Editor here at MyWallSt. His favorite stock is Apple, which is also the first stock he ever bought. Jamie is not only a big fan of its products, but he believes that the tech giant has a whole lot more to give the world, and hasn't even scraped the surface of its potential.