NEW YORK – Peloton Interactive (NASDAQ: PTON) won the dismissal of a lawsuit claiming it defrauded shareholders by concealing how demand for its home exercise equipment, which surged after the COVID-19 pandemic began, was declining as vaccines became available and gyms began reopening.
In a Monday night decision, U.S. District Judge Andrew Carter in Manhattan said several optimistic Peloton statements about the company’s future were accompanied by “very detailed warnings,” including that lockdowns could end and people could resume their pre-pandemic routines.
Carter did not address whether the New York-based maker of stationary bicycles and treadmills intended to defraud shareholders, calling its alleged false statements “entirely consistent” with its actual financial results.
Robeco Capital Growth Funds SICAV – Robeco Global Consumer Trends, an investment company based in Rotterdam, Netherlands, led the proposed class action.
Lawyers for the shareholders didn’t immediately respond to requests for comment on Tuesday. Peloton and its lawyers didn’t immediately respond to similar requests.
Shareholders between February 5, 2021, and January 19, 2022, had sought to recoup losses as Peloton’s (NASDAQ: PTON) stock price fell more than 80%.
The challenged statements included former Chief Executive John Foley’s November 4, 2021 assessment that Peloton was “well-equipped” for the holiday season, even as it cut its full-year revenue forecast and said 91% of inventory was unsold.
Though Peloton’s stock price fell 35% the next day, Carter said Peloton ultimately met its quarterly sales forecast, and anecdotal evidence that some staff missed their sales quotas “do not support an inference of falsity.”
Peloton (NASDAQ: PTON) reported its first sales increase in nine quarters in August, three months after announcing a planned 15% workforce reduction. Its stock price has fallen more than 97% since peaking in Jan. 2021.
The case is Robeco Capital Growth Funds SICAV – Robeco Global Consumer Trends v Peloton Interactive Inc et al, U.S. District Court, Southern District of New York, No. 21-09582.
(Source: Reuters)
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