Peloton (PTON) stock raced higher on Thursday after earnings in the holiday quarter beat expectations thanks in large part to a tie-up with Costco (COST).
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PTON told shareholders it has a “steep hill to climb” to achieve sustainable profit growth under new CEO Peter Stern as it delivered a broadly, though not entirely, positive set of financial results for its Fiscal second quarter of 2025.
Shares jumped 14% in pre-market trading after PTON reported revenue of $673.9 million for the December quarter, ahead of Wall Street’s estimated $652.7 million. However, revenues were down 9% from a year ago and the loss of $0.24 a share was wider than the $0.20 analysts anticipated.
Moreover, the company saw membership decline 4% to 6.2 million over the last year, with paid app subscriptions down 19%.
PTON Outlook and Margins Improve
Nevertheless, investors cheered as it raised its full-year outlook for earnings and pointed to a significant partnership with Costco. PTON said the new seasonal partnership with Costco drove more Bike+ unit sales than any other third-party retail partner during Q2.
Meanwhile, margins rose to 12.9%, hitting double-digits for the first time in three years.
Looking ahead, it expects full year revenue between $2.43 billion and $2.48 billion and raised guidance for adjusted earnings before interest, taxes, depreciation, and amortization to a range of $300 million to $350 million, which is a $60 million step-up from the previous range of $240 million to $290 million. PTON also upped its free cash flow target to at least $200 million from $125 million.
Is PTON a Good Stock to Buy?
Overall, Wall Street has a Hold consensus rating on PTON stock, based on six Holds. The average PTON price target ahead of earnings was $9.25, which is subject to change.
