Peloton seeks dismissal of inflated COVID sales investor suit

Top Class Actions’s website and social media posts use affiliate links. If you make a purchase using such links, we may receive a commission, but it will not result in any additional charges to you. Please review our Affiliate Link Disclosure for more information.

Update: 

• Peloton Interactive Inc. asked a New York federal judge to dismiss a 2021 lawsuit alleging it overstated its earnings potential.
• In a motion filed June 16 in a Manhattan federal court, Peloton argued against claims it gave unrealistic expectations of its performance because it achieved its sales guidance for 2021.
• The City of Hialeah Employees’ Retirement System claims Peloton repeatedly “falsely assured” investors its success was not solely due to the COVID-19 pandemic and that it would continue to grow once the global health crisis subsided.
• Peloton says other claims that did not come to fruition were simply forward-looking statements or statements of corporate optimism protected by the safe harbor provision of the Private Securities Litigation Reform Act.

Peloton investor class action lawsuit overview: 

• Who: The City of Hialeah Employees’ Retirement System filed a class action lawsuit against Peloton Interactive, Inc. and three of its executives. 
• Why: The plaintiffs claim Peloton injured investors financially by downplaying how much of the company’s success was due to the COVID-19 pandemic.
• Where: The class action lawsuit is pending in New York federal court.

(Nov. 22, 2021)

Peloton Interactive Inc. downplayed to investors how much the COVID-19 pandemic was financially benefiting the company, a new class action lawsuit alleges. 

The City of Hialeah Employees’ Retirement System claims Peloton repeatedly “falsely assured” investors its success was not solely due to the COVID-19 pandemic, and that it would continue to grow once the global health crisis subsided.

The plaintiff wants to represent a nationwide Class of investors who purchased or otherwise acquired common Peloton stock between Dec. 9, 2020 and Nov. 4, 2021. 

Peloton hid declining demand as pandemic lockdowns lifted, claims class action

Plaintiff claims Peloton’s common stock declined after it revealed on Aug. 26 that it had too much inventory compared to consumer demand, and that, due to a “material weakness in its internal control over financial reporting,” it could not properly inform investors about the issue.

“Peloton’s Class Period financial results were primarily driven by COVID-related increases in demand for at-home exercise options,” states the class action lawsuit. 

“As gyms have reopened and other outside-the-home exercise options have become more available due to COVID vaccinations being more widespread and other COVID-related restrictions abating, demand for Peloton’s equipment and subscription services have declined substantially.” 

Despite the fact that fewer consumers were willing to pony up for in-home gym equipment, The City of Hialeah Employees’ Retirement System—which purchased Peloton stock during the Class period—claims the company continued to falsely reassure investors about its future financial outlook while maintaining an expectation for a “continued strong demand.” 

Peloton stock would ultimately drop nearly 35 percent—wiping out $8.1 billion in value—on Nov. 4, however, after the company announced it revised its full-year revenue guidance for fiscal year 2022 from $5.4 billion to $4.8 to $4.4 billion due to declining demand, according to the class action lawsuit. 

Plaintiff claims Peloton committed multiple violations of the Securities Exchange Act of 1934. The retirement system is demanding a jury trial and requesting compensatory damages for itself and all Class Members. 

A separate class action lawsuit was filed against Peloton in August concerning allegations the company unlawfully charged sales tax to consumers in New York, Massachusetts, and Virginia. 

Were you injured financially by Peloton’s disclosures about its projected future financial outlook? Let us know in the comments! 

The plaintiff is represented by Hannah Ross, Avi Josefson, and Scott R. Foglietta of Bernstein Litowitz Berger & Grossmann LLP. 

The Peloton Investor Class Action Lawsuit is City of Hialeah Employees’ Retirement System v. Peloton Interactive, Inc., et al., Case No. 1:21-cv-09582, in the U.S. District Court for the Southern District of New York.

Read About More Class Action Lawsuits & Class Action Settlements:

• Gold’s Gym California Violated ADA and UCRA By Denying Access to Blind and Visually Impaired People, Class Action Says
• Peloton To Release Peloton Tread Following Recall, Class Action Lawsuits
• Peloton Members Charged ‘Unlawful’ Sales Tax, Class Action Alleges
• Peloton Opposes Class Action, Says Lead Plaintiff Impersonated Attorney