• Loading stock data...
Thursday, February 13, 2025
Law

Judge Dismisses Peloton Investor Lawsuit in District Court

  • Investors sought to recoup losses from the company’s post-COVID-19 fall.
  • Peloton posted its first sales increase in nine quarters in August.
Imagn Images

Peloton continues to rack up wins. 

Two months after posting its first sales increase since 2022, the fitness equipment company won dismissal of a lawsuit brought by investors claiming it defrauded shareholders by making misleading statements about demand for its product as the country began to reopen after the COVID-19 pandemic. 

The case ended Monday night in Manhattan by U.S. District Judge Andrew Carter, who said several of Peloton’s statements about the company’s future came with a “very detailed warning” about possible lockdowns ending and consumers resuming their pre-pandemic routines. The lawsuit, which was filed in March 2023 by Netherlands-based investment company Robeco Capital Growth Funds SICAV, was originally filed in November 2021. It covers those who bought Peloton stock between Feb. 5, 2021 and Nov. 4, 2021.

Peloton saw a significant sales bump during the pandemic as consumers stayed home as gyms closed. Consumers sought ways to work out without having to leave the house, leading to a surge in sales of its stationary treadmills and bicycles. In September 2020, the company posted a 172% surge in sales and saw its shares increase over 200% in the calendar year despite the pandemic’s negative impact on the overall economy.

The company has struggled to regain its momentum. Peloton’s stock peaked in December 2020 at around $162 per share; now it’s under $5—a 97% drop.

According to the lawsuit, Peloton ramped up production of its equipment after seeing a spike in demand during the pandemic in 2020. It told investors it would be making investments into its supply chain to keep up with the soaring demand. But by 2021 the plaintiffs allege demand dropped off, and they say the company “hid the true nature of the declining demand to investors and publicly stressed that its investment into its supply chain was necessary and appropriate given the sustained demand for its products.” The lawsuit argues that by early 2021 Peloton’s management knew demand for its products had begun to fall.

One of the challenged statements was former CEO John Foley’s comments from November 2021 that the company was “well-equipped” for the holiday season despite cutting Peloton’s revenue forecast and combating 91% of unsold inventory. The comments led to a 35% stock drop the following day, but Judge Carter said Peloton still met its quarterly sales quotas, and anecdotes of employees missing sales goals “do not support an inference of falsity.”

In his conclusion, Carter did not say whether Peloton intended to defraud shareholders, calling the alleged false statements “entirely consistent” with the company’s finances. 

Linkedin
Whatsapp
Copy Link
Link Copied
Link Copied

What to Read

Minjee Lee of Perth, Australia lines up her putt on the 2nd hole on Thursday, Feb. 6th during the first round of the LPGA 2025 Founders Cup at the Bradenton Country Club in Bradenton, Florida.

New LPGA Rules to Speed Up Game with ‘Stronger Deterrent’

The LPGA will penalize players for taking too long.

What Has to Happen Next for Flag Football to Become an NCAA..

Flag football is one step closer to being a full-fledged college sport.
Feb 9, 2025; New Orleans, LA, USA; Philadelphia Eagles running back Saquon Barkley (26) talks to the media with his daughter, Jada, after defeating the Kansas City Chiefs in Super Bowl LIX at Caesars Superdome.

Saquon Barkley Chides Eagles Fans for Booing Taylor Swift: ‘Only Helping’

Barkley made the comments in an interview with Howard Stern on SiriusXM.

Featured Today

Jan 9, 2025; Pittsburgh, Pennsylvania, USA; Edmonton Oilers center Connor McDavid (97) checks Pittsburgh Penguins center Sidney Crosby (87) during the third period at PPG Paints Arena

‘Important’ 4 Nations Face-Off Can Be NHL’s All-Star Antidote

“The stars have been lobbying the league for an event like this.”
Brady and Mahomes
February 8, 2025

Chiefs Fatigue Is Real. It’s Nowhere Near Patriots Hate Yet

People who have covered both teams say the difference is stark.
Nov 24, 2024; Inglewood, California, USA; Philadelphia Eagles quarterback Jalen Hurts (1) celebrates with running back Saquon Barkley (26) after the Eagles defeat the Los Angeles Rams during the first half at SoFi Stadium.
February 7, 2025

How the Eagles Reinvented Championship Roster Construction

Philadelphia is one of the most innovative franchises in the NFL.
February 3, 2025

‘Ultimate Throwback’: The Unimpeachable Cool of Hartford Whalers Gear

Nostalgia and street cred have driven a consistent frenzy for merch.
Oct 13, 2024; London, United Kingdom; A general view as Jacksonville Jaguars quarterback Trevor Lawrence (16) prepares to take the snap against the Chicago Bears on the NFL shield logo during an NFL International Series game at Tottenham Hotspur Stadium.

Fans Sue NFL for Not Letting Teams Use Bluesky

The suit alleges the NFL is unlawfully loyal to X/Twitter.
February 9, 2025

What the NFL and Fox Risked With Kendrick Lamar Performing ‘Not Like..

Lamar didn’t use the word “pedophile,” but he still made allegations.
Isaiah Wright, a running back featured on the Netflix series "Last Chance U, is playing football for the Alcoa Alloys, a semipro team with the Interactive American Football League on Saturday, April 6, 2019.
February 11, 2025

‘Last Chance U’ Participants File $30M Lawsuit Against Netflix, Others

Producers of “Last Chance U” allegedly took “unfair advantage” of players.
Sponsored

How UBS Crafts Impactful Partnerships Across Sports, Arts, and Culture

As UBS continues to expand its impressive array of sports and entertainment partnerships, the company solidifies its position as a leader in wealth management.
February 6, 2025

Ippei Mizuhara Sentenced to 57 Months in Prison for Stealing Millions From..

Mizuhara had asked for a lighter sentence of 18 months.
A Fox Sports camera records on the sideline prior to the NCAA football game between the Ohio State Buckeyes and the Nebraska Cornhuskers at Ohio Stadium in Columbus on Saturday, Oct. 26, 2024.
February 6, 2025

Fox Seeks Dismissal of Sex Abuse Lawsuit, While Bayless, Taylor Deny Wrongdoing

Skip Bayless and Joy Taylor deny the allegations made against them.
The NCAA logo on the field in the closing second of the Anderson University inaugural football game with St. Andrew's University on Spero Financial Field at Melvin and Dollie Younts Stadium at Anderson University in Anderson, S.C. Saturday, September 7, 2024. Anderson won 51-14.
February 5, 2025

Three Penn Swimmers Sue Ivy League, NCAA Over Trans Participation Policy

The lawsuit’s plaintiffs are requesting class-action status.
New York attorney general Letitia James
February 5, 2025

NWSL to Pay Players $5 Million in Abuse Settlement

Years of abuse in the NWSL came to light in 2021.