Peloton Must Face Investor Lawsuit as It Pivots to Wellness

August 29, 2025

During COVID, Peloton couldn’t make bikes fast enough. By 2021, demand sputtered and warehouses swelled with unsold equipment and now those woes are at the center of a revived shareholder lawsuit.

On Wednesday, a federal appeals panel in Manhattan reversed in part a lower court’s dismissal, saying investors can move forward with claims that Peloton and several former executives, including co-founder and then-CEO John Foley, made false and misleading statements that propped up the stock. Foley exited Peloton in early 2022 and has since pivoted to home décor with Ernesta.

The suit, led by the City of Hialeah Employees’ Retirement System and Robeco Capital Growth Funds, covers trades between February 5, 2021, and January 19, 2022. Investors allege that Peloton concealed weakening demand while warehouses held roughly three months of unsold equipment.

Most of Peloton’s public statements were tossed out, but the appeals court found three disclosures that plausibly crossed the line: Foley’s defense on an August 2021 earnings call that a $400 price cut was “absolutely offensive” rather than defensive, and SEC filings in August and November 2021 that described excess inventory as only a potential risk.

When Peloton later disclosed that 91% of its inventory was unsold and slashed its annual revenue forecast by more than $1 billion, shares plunged 35% in a single day in November 2021. Athletech News