Is Peloton Stock Halal?
How much of Peloton’s revenue comes from haram?
Peloton earns its revenue from the following revenue sources:
- Connected Fitness Products:
Includes revenue generated from selling exercise equipment such as exercise bikes and treadmills.
In addition, Peloton offers delivery and installation services, extended warranty agreements, and apparel.
- Subscriptions:
Includes fees charged on a month-to-month basis for access to Peloton’s range of live and on-demand fitness classes.
The contributions from each of Peloton’s revenue segments in their 2020 annual report were as follows:
Practical Islamic Finance concludes:
None of Peloton’s revenue comes from anything inherently haram.
Does Peloton rely on interest to operate?
| Year-to-Date for period ended 3/31/2021 | Fiscal year ended 6/30/2020 | Fiscal year ended 6/30/2019 | |
|---|---|---|---|
| Interest Income | $3,500 | $16,200 | $7,000 |
| Total Revenue | $2,326,300 | $1,825,900 | $915,000 |
| Interest Expense | $5,100 | $900 | $300 |
| Total Expenses | $2,282,000 | $1,906,700 | $1,099,200 |
| Interest Income / Revenue | 0.15% | 0.89% | 0.77% |
| Interest Expense / Total Expense | 0.22% | 0.04% | 0.03% |
Practical Islamic Finance concludes:
Riba is used but not relied upon in Peloton’s operations.
What is Peloton’s Environmental, Social, and Governance (ESG) impact?
Environment
No notable environmental highlights.
Social
Peloton has a high Glassdoor rating of 4.2 out of 5.0 from current and previous employees compared to a 3.3 average for all other Glassdoor rated companies.
Governance
In May of 2021, Peloton placed a voluntary recall on its Tread+ Treadmill after a 6-year-old child was pulled underneath one of its treadmills and passed away.
What is especially concerning is prior to this incident, The U.S. Consumer Product Safety Commission had warned Peloton about their safety concerns after hearing numerous stories of adults, pets, and children getting pulled under their treadmills.
Peloton’s previous response to these warnings was lackluster.
Before the incident the CEO of the company, John Foley, stated in a press release:
“You may also have read news reports suggesting that CPSC believes that we should stop selling or recall the Tread+. I want to assure you that we have no intention of doing so. The Tread+ is safe when our warnings and safety instructions are followed, and we know that, every day, thousands of Members enjoy working out safely on their Tread+.”
Now that a child has died, the CEO states Peloton had made a mistake and “should have engaged more productively with the CPSC”.
Peloton has released a safety feature for its treadmill that stops and locks the belt after 45 seconds of non-use outside of an exercise class.
In addition, users are now directed to enter a four-digit code to unlock the belt and start it again.
Practical Islamic Finance finds Peloton’s previous handling of safety concerns to be not as serious as needed.
However, given Peloton has seemingly corrected course now, we are willing to give the company the benefit of the doubt moving forward
Practical Islamic Finance will monitor Peloton’s handling of future safety concerns.
Practical Islamic Finance concludes:
Peloton has a net positive ESG impact.
Comfort Rating
From Peloton’s business, financial, and ESG reviews, Practical Islamic Finance rates Peloton stock as:
Comfortable to invest in from a Halal perspective.
Sources
After child dies, US regulator warns about Peloton treadmill
Peloton recalls treadmills after 6-year-old’s death, CEO admits “mistake”