iv had some pretty bad issue with peat pellets though i do still use them.
I removed the netting from the pellet, and removed some of the excess peat and planted into soil.
Some of the plants did pretty much nothing, grew slightly then just stopped. Maybe 7 out of 10 of them.
I decided to see what was going on and took a few out of their pots with the intention of re-potting them.
What i found was the roots has not gone past the peat even though I had removed the netting. They had stayed small and weak and not moved from the peat into the rest of the potting medium.
Now, that potting medium I later found out was way too acidic so that may have had something to do with it.
But now I don't take any chances, I remove the netting and put the pellet under the tap to remove all the peat from the roots before planting into its pot..
If you put the pellet straight in there, try taking one out and see if the roots have passed through it properly.
I bet they havent.