After Peloton (PTON) recalled both its Tread and Tread+ treadmill machines over safety concerns, one analyst isn’t worried about long-term backlash, saying it’s just a ‘pause’ for the company rather than a significant setback.
The Peloton treadmill recall is “obviously not a great result,” JMP Managing Director Ron Josey told Yahoo Finance Live. “But it’s more of a pause simply because the demand that we think Peloton has and really the community base… is hard to replicate.”
“Our view is the vast majority won't return the actual machine,” said Josey. “We believe the vast majority put it in a place that is relatively safe in their home.”
Peloton CEO John Foley tried to ease investor concern on its earnings call Thursday night, calling the financial impact “short term.” Peloton estimates the recall will cost the company approximately $165 million, and as a result, lowered its sales and profit guidance for the fiscal year ending June 30.
The $4,295 Tread+ is connected to one death and at least 70 incident reports, while there are 18 reports of the touchscreen loosening and six reports of the touchscreen detaching on its less-expensive Tread product.
The key question for analysts is how big of a blow the recall will be to Peloton’s reputation. Foley acknowledged the impact it could on the company, saying Peloton "has some work to do to get back on the right side of the line with trust and safety."
Josey, on the other hand, does not think the recall will cause consumers to second-guess their Peloton purchases, arguing the consumer base is very strong.
“It's amazing what Peloton has created. We like to call it the three C's — the content, the community, and the convenience — of their workout. It's something that we have never seen before ... I think the awareness of the brand and the following of the brand will overcome any shorter term impact you're seeing today,” added Josey.
Seana Smith anchors Yahoo Finance Live’s 3-5 p.m. ET program. Follow her on Twitter @SeanaNSmith