NEW YORK, December 2, 2021 / PRNewswire / – Pomerantz LLP announces that a class action lawsuit has been filed against Peloton Interactive, Inc. (“Peloton” or the “Company”) (NASDAQ: PTON) and certain of its officers. The class action, filed in United States District Court of the Southern District of new York, and listed under 21-cv-10266, is in the name of a class composed of all persons and entities other than the defendants who have purchased or otherwise acquired the ordinary shares of Peloton between December 9, 2020 and November 4, 2021, inclusive (the “Remedy Period”).
The claims raised herein are alleged against Peloton and certain of the senior officers of the Company (collectively, the “Defendants”), and arise from Sections 10 (b) and 20 (a) of the Securities Exchange Act of 1934 (the “ Exchange Act “) and United States Securities and Exchange Commission (” SEC “) Rule 10b-5 promulgated under it.
If you are a shareholder who purchased Peloton common shares during the Class Period, you have up to January 18, 2022 ask the court to appoint you as the principal plaintiff for the group. A copy of the complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby To [email protected] or 888.476.6529 (or 888.4-POMLAW), toll free, Ext. 7980. Those inquiring by e-mail are encouraged to provide their mailing address, telephone number and the number of shares purchased.
Situated at New York City, Peloton is a fitness equipment and media company. During the Class Period, Peloton sold Internet-connected stationary bikes and treadmills that were designed and marketed for use in clients’ homes. Bikes and treadmills feature connected touchscreen devices that allow customers to access exercise classes and other content. To this end, in addition to exercise equipment, Peloton sells monthly subscription services that allow customers to access fitness classes using their Peloton equipment, or alternatively access classes and content. associated on their own devices, without using the Peloton equipment.
Throughout most of 2020 and 2021, as the COVID-19 pandemic and resulting stay-at-home orders and business closures largely kept individuals away from the gym, demand for options home exercise has increased dramatically. Against this background, in the months leading up to the Class Period, Peloton experienced unprecedented demand for its products and services. As a defendant John foley (“Foley”) confirmed in statements to investors on February 11, 2021, “There was a crazy demand for our products because the gyms were closed or you didn’t want to go to the gym because you might have COVID. So the demand has exploded.[.]”
The complaint alleges that, throughout the litigation period, the defendants repeatedly and erroneously assured investors that Peloton’s recent success was not primarily due to increased demand related to COVID, but rather that the company’s growth and financial results were sustainable and would continue after COVID. For example, on December 9, 2020, on the first day of the Recourse Period, in response to an investor’s question on “how a post-COVID world impacts [Peloton’s] seen [its] business opportunity, “the defendant Foley assured investors that Peloton’s results” ha[ve] nothing to do with COVID. It’s a human need to I want to get in shape, I want the fitness in my life in a consistent way; . . . I want it to be practical, I want it to be fun, I want it to be motivating and I want it to be great value. And all of these things are the basis of what Peloton offers, always delivered. We delivered it pre-COVID, during COVID, and we will deliver it post-COVID. “
The Defendants also told investors during the Class Period that investments in the Company’s supply chain, including increasing the number of bicycles and treadmills produced and reducing the average time required to deliver products to customers, were wise investments that would allow Peloton to align supply and demand for its products. For example, on February 4, 2021, in a letter to Peloton shareholders, the company said that “our investments in the supply chain over the past few months are helping us better match our supply and demand going forward.” Accordingly, the Defendants stated that increasing inventory levels reported in the Company’s periodic financial reports filed with the SEC during the Class Period reflected pending demand, including orders that had not yet been fulfilled. , rather than an oversupply that exceeded declining demand.
The defendants’ statements during the appeal period that Peloton would continue to succeed and grow after COVID were false. In truth, Peloton’s financial results for the recourse period were primarily due to the increase in demand for home exercise options related to COVID. As gyms have reopened and other exercise options outside the home have become more available due to the spread of COVID vaccinations and the decrease in other COVID-related restrictions, the demand Peloton’s equipment and subscription services has declined significantly.
Additionally, rather than matching supply and demand, Peloton experienced massive inventory growth that far exceeded customer demand. In addition, the Company admitted that it suffered from a material weakness in its internal control over financial reporting during the Class Period, in particular with respect to inventory levels. In light of this significant weakness, the Company could not accurately report its inventory levels and had no solid basis to assure investors that supply and demand were aligned.
The truth began to emerge on August 26, 2021, following the market close, when Peloton revealed, a day before the Company’s financial results for its 2021 fiscal year were announced, that “during our fiscal year 2021 audit process, a significant weakness was identified in our internal controls on financial reports concerning the identification and valuation of inventories. In the company’s annual report for its 2021 fiscal year, filed with the SEC on Form 10-K on August 27, 2021, he further revealed that “this significant weakness is due to the fact that our controls have not been designed, documented and maintained in an effective manner to verify that our physical inventory counts have been correctly counted and reported for reporting in our financial statements ”.
As a result of these disclosures, the price of Peloton’s common shares declined by $ 9.75 per share, i.e. 8.5%, from a closing price of $ 114.09 per share on August 26, 2021 at a closing price of $ 104.34 per share on August 27, 2021.
At the same time, however, Peloton has made false and reassuring statements to investors, including issuing $ 5.4 billion of total revenue for the 2022 financial year (beginning of September 1, 2021), which represents a growth of 34% year over year. Discussing this orientation, the respondent Jill woodworth asserted that “we are entering fiscal 2022 with a normalized order book for our bicycle portfolio and the forecast reflects our expectation of continued strong demand.”
Then on November 4, 2021, after the market closed, Peloton shocked investors by revealing that it had revised its revenue forecast for the entire year to a range of $ 4.4 To $ 4.8 billion due to declining demand, its customers are increasingly free to exercise outside of their homes. And regarding the inventory, Peloton revealed that the inventory totaled $ 1.27 billion, an increase of 35% over the previous quarter, of which 91% were “finished products” that the Company still held.
As a result of these disclosures, the price of Peloton’s common shares declined by $ 30.42 per share, i.e. more than 35%, from a closing price of $ 86.06 per share on November 4, 2021 To $ 55.64 per share on November 5, 2021, erasure $ 8.1 billion in shareholder value.
Pomerantz LLP, with offices in new York, Chicago, Los Angeles, Paris, and Tel Aviv, is recognized as one of the leading firms in the areas of corporate, securities and antitrust litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class actions bar, Pomerantz was a pioneer in the field of securities class actions. Today, more than 85 years later, Pomerantz continues the tradition he established, fighting for the rights of victims of securities fraud, breach of fiduciary duty and professional misconduct. The firm has recovered numerous multi-million dollar damages on behalf of the members of the group. See www.pomlaw.com.
Robert S. Willoughby
888-476-6529 ext 7980
SOURCE Pomerantz LLP