Peloton stock sheds $4 billion in market value in 1 day over its treadmill debacle

Peloton shares closed Wednesday down nearly 15%, wiping $4.1 billion off its market value in one day, after the fitness equipment maker apologized for not voluntarily recalling both its treadmill machines over safety concerns sooner.

Since March 18, Peloton's market cap has shed $7.4 billion. That Thursday was when Peloton's CEO John Foley revealed for the first time that an accident involving a Peloton treadmill had resulted in a child's death. The company has since been in back-and-forth discussions with the U.S. Consumer Product Safety Commission regarding dozens of reported injuries tied to its machines.

Peloton's stock was a huge winner in 2020, with shares surging more than 400% for the year. Peloton's market valued peaked in mid-January at $49 billion. Investors rallied behind Peloton as it saw tremendous growth during the early days of the Covid pandemic.

Consumers were looking for ways to excercise at home, while gyms were shut down, and Peloton quickly became the option of choice for those who could afford its high-end cycles and treadmills. Peloton's 2020 revenue surged to $1.8 billion, from $915 million a year earlier. 

But 2021 has been a different story. The stock is down 45% so far this year. Some of the decline has come as investors no longer favor companies that benefited from stay-at-home trends. Other stocks like Zoom and Netflix have started to fade as well. However, Peloton's decline is deeper due to the treadmill debacle.

On Wednesday, Peloton shares hit an intraday low not seen since September. The stock closed the day at $82.62.

"We view this as another sign that Peloton's voice and platform grew faster than its business, and it is still working to grow into its fame," BMO Capital Markets analyst Simeon Siegel said in a note to clients. "With a still ~$30 billion market cap ... Peloton's market value looms much larger than its expected results."

"We believe one can argue more of Peloton's market value has been created by its marketing department than by its engineers or instructors," Siegel said.

Siegel has an underperform rating on Peloton shares, with a price target of $45.

On the whole, though, Wall Street analysts are having a difficult time reaching a consensus over which way shares will go next. Some, in fact, see the dip as a chance to buy.

"In the years ahead, we will recall this moment in Peloton history as the proverbial buying opportunity," said Stifel's Scott Devitt.

Peloton said Wednesday it should have acted more quickly to resolve the issue with the treadmill. It said it's working on a repair that will be offered to treadmill owners in the coming weeks. It had been working toward debuting its less expensive treadmill model in the United States later this year, but it's unclear if the company will move forward with those plans.

"I want to be clear, Peloton made a mistake in our initial response to the Consumer Product Safety Commission's request that we recall the Tread+," Foley said. "We should have engaged more productively with them from the outset. For that, I apologize."

Peloton is set to report quarterly earnings after the market close on Thursday.

Read the full statement from the CPSC here.

—CNBC's Christopher Hayes contributed to this reporting.