🚲 ​​Is Peloton Cycling Itself Into Trouble?
Peleton is grappling with a slew of legal troubles
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​🚴 Peloton: Cycling Itself Into Trouble?
Exercise equipment manufacturer Peloton Interactive Inc. (PTON) is facing a class-action lawsuit after two customers complained of membership fee overcharge. If admitted by the judge overseeing the case, this lawsuit won’t help the stock, which was already battered in the first half of the year.
Willful Overcharging?
The complaint filed in the Federal District Court of Manhattan accuses the maker of at-home stationary bicycles of improperly charging sales tax on membership in three states - New York, Virginia, and Massachusetts. It accuses Peloton of "willfully and knowingly overcharging its subscribers" to maximize its profit.
The two complainants have alleged the company charged them a 6% sales tax every month for almost two years, and when they demanded a reimbursement, Peloton flatly refused to refund the amount. The company changed its taxation practices in these three states at the beginning of 2021.
Peloton - Cycle Or Caffeinated Drink?
Separately, there’s the tiff with a beverage company called Peloton Cold Brew. Peloton Cold Brew LLC got its trademark to use the word "P" for coffee drinks back in 2017. Peloton (the protagonist of today’s story) filed a plea with the United States Patent and Trademark Office to invalidate Peloton Cold Brew’s trademark.Â
Peloton Cold Brew dragged Peloton Interactive to court, insisting that the trademark is in a different sector altogether and that the question of confusion does not arise.Â
These affairs have put a dampener on Peloton's share price, which had just begun a recovery from the lows of May. Peloton seems precariously poised, at least as far as the class-action lawsuit is concerned.Â
Will the company be able to steer away from these troubles on a stationary bike? It’ll depend on whether it’s able to convince the sitting judge of its innocence. But that’s easier said than done!
Market Reaction
PTON ended the day at $110, down 0.79%.
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