Shares of Peloton (PTON) are under pressure following the announcement of two separate voluntary recalls of the company’s Tread+ and Tread treadmills. Peloton is recalling about 125,000 Tread+ treadmills with model number TR01 after a six-year-old child recently died after being pulled under the rear of the treadmill and following 72 reports of incidents involving the treadmills. Additionally, Peloton is recalling about 1,050 Tread treadmills in the U.S. and about 5,400 in Canada, as the touchscreen on the treadmill can detach and fall, posing a risk of injury to consumers.

TREADMILL RECALL: Peloton is recalling about 125,000 Tread+ treadmills with model number TR01. The treadmill was launched as the Peloton Tread in 2018 but renamed Tread+ in September 2020. A 6-year-old child recently died after being pulled under the rear of the treadmill. In addition, Peloton has received 72 reports of adult users, children, pets and/or objects being pulled under the rear of the treadmill, including 29 reports of injuries to children such as second- and third-degree abrasions, broken bones, and lacerations. "Consumers should immediately stop using the recalled Tread+ and contact Peloton for a full refund until November 6, 2022," the statement said.

Additionally, Peloton is recalling about 1,050 Tread treadmills in the U.S. and about 5,400 in Canada, as the touchscreen on the treadmill can detach and fall, posing a risk of injury to consumers. The firm is aware of 18 reports of the touchscreen loosening and six reports of the touchscreen detaching and falling. No injuries have been reported in the U.S. There have been reports of minor injuries such as abrasions, minor cuts, and bruises in Canada and the United Kingdom. "Consumers should immediately stop using the recalled treadmills and contact Peloton for a full refund. This product is different than the Peloton Tread+ that was also recalled by the CPSC on May 5, 2021, because children, pets, and objects can be pulled underneath the Tread+ deck, posing a risk of injury or death," the statement added.

WHAT'S NOTABLE: Back on April 17, the U.S. Consumer Product Safety Commission had issued a bulletin about the "danger of popular Peloton Tread+ exercise machine after multiple incidents of small children and a pet being injured beneath the machines. The Commission has found that the public health and safety requires this notice to warn the public quickly of the hazard." The warning came less than a month after Peloton itself released news of a child's death by a Peloton Tread+. CPSC said that its staff believes the Peloton Tread+ "poses serious risks to children for abrasions, fractures, and death." "In light of multiple reports of children becoming entrapped, pinned, and pulled under the rear roller of the product, CPSC urges consumers with children at home to stop using the product immediately," it added.

At the time, Truist analyst Youssef Squali said that while the warning by the Consumer Product Safety Commission regarding the use of its Tread+ product following reports of one child death and 39 injuries is a "black eye" for Peloton's public relations, it should not have a material impact on its profit and loss statement. The analyst stated that it is unclear whether Tread+ is any more dangerous to children than the average treadmill, with CPSC itself noting that there were 22,500 ER visits in 2019 related to treadmills.

In a research note on April 19, JPMorgan analyst Doug Anmuth recommended buying shares of Peloton Interactive on weakness following the Consumer Product Safety Commission warning on the Tread+. Since Peloton publicly informed its community about a tragic accident involving a child and the Tread+, the company has taken numerous additional steps to ensure the safety of the product, Anmuth contended.

PRICE ACTION: In Wednesday morning trading, shares of Peloton have dropped about 6% to $90.95.