Peloton wins dismissal of shareholder lawsuit over post-pandemic outlook (updated)

Peloton Interactive

27/08/2026 21:07

Adds details from decision, shareholder and Peloton arguments, attempts to obtain comment, byline
By Jonathan Stempel
NEW YORK, Aug 27 (Reuters) - A federal judge dismissed a lawsuit on Thursday accusing Peloton PTON.O of defrauding shareholders by concealing excess inventory of its home exercise equipment as the worst of the COVID-19 pandemic passed.
U.S. District Judge Andrew Carter in Manhattan said shareholders failed to show that the maker of stationary bikes and treadmills intended to defraud them with three allegedly false and misleading statements to inflate its stock price and the personal holdings of three former top executives, including CEO John Foley.
The statements included Foley's claim in an August 26, 2021, earnings call that a $400 bike price cut was an "absolutely offensive" strategy to boost sales rather than a defensive strategy to counteract weakness. They also included two warnings in regulatory filings of hypothetical risks regarding "excess inventory levels."
Shareholders sued after Peloton's stock price tumbled as vaccines became widely available and gyms began reopening. The decline included a 35% plunge on November 5, 2021, after the New York-based company slashed its full-year earnings forecast and said 91% of inventory was unsold.
A lawyer for shareholders led by the Netherlands-based Robeco Capital Growth Funds declined to comment. Peloton and lawyers for the defendants did not immediately respond to requests for comment.
Carter said Peloton repeatedly warned investors that the pandemic was "uncharted territory" that made projecting inventory needs difficult. He found insufficient proof that top executives believed in August 2021 that the company had too much inventory.
The judge also rejected shareholders' argument that the executives prematurely canceled trading plans to sell stock at pre-arranged intervals, known as 10b5-1 plans, to avoid selling shares at depressed prices after disclosing bad financial news.
Such behavior was not suspicious, the judge said, because it suggested that the executives "did not rush to cash out."
Carter dismissed an earlier version of the lawsuit in September 2024. The federal appeals court in Manhattan revived part of the case last August.
Peloton's share price has fallen more than 96% since early 2021.

(Reporting by Jonathan Stempel in New York; Editing by Mark Porter)
((jon.stempel@thomsonreuters.com ; +1 646 223 6317; Reuters Messaging: jon.stempel.thomsonreuters.com@reuters.net /))