Peloton Interactive (PTON) peaked above $167 per share during the heady days of 2021 as it became an unsuspecting beneficiary (and a major winner) of the pandemic era. These days, the stock trades at around $8, having traded below $3 last year.
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It was a painful readjustment for long-term Peloton shareholders, but the stock is quietly staging a comeback from its record lows. Peloton stock has bounced more than 200% from its 52-week low of $2.70 and currently trades at $8.27 per share. Over the past twelve months, PTON stock is up 41%.
While it’s unlikely for the stock to return to its COVID-era highs, the current rally still has plenty more to run. With the bad news surrounding the stock now fully priced in, I’m bullish on Peloton based on the company’s improved results, a renewed focus on profitability, and the many potential catalysts on the horizon.
PTON Rises Like a Phoenix from the Flames
Peloton stock was one of the stock darlings of the COVID pandemic, as millions of fitness junkies bought Peloton equipment as gyms stayed closed for more than a year. The fitness company became a cultural phenomenon as its stock price skyrocketed. However, as the pandemic faded, demand waned and inventory built up, forcing the company into slashing prices and launching marketing gimmicks in a desperate bid to hold onto its market share.
With sentiment at rock bottom and investors switching off months ago, there may be life in the old dog just yet. When sentiment reaches a nadir, it only takes a tiny tidbit of good news to breathe new life into a stock. And that’s precisely what happened with Peloton in the latter half of 2024. At the end of October, the company reported better-than-expected quarterly results, sending the stock 25% higher and recording its biggest single-day gain for over 3 years. Analysts expected Peloton to lose 16 cents a share, but the company beat these expectations by breaking even. The headline-grabbing figure was Peloton’s $900,000 quarterly loss, with investors interpreting this as good news compared to Peloton’s $159 million loss a year earlier.
The fitness specialist also provided improved EBITDA guidance to the market, surpassing analyst expectations and reinvigorating sentiment in this depleted stock.
PTON’s recovery was achieved by slashing costs, reducing inventory, and prioritizing profitability through lowering customer acquisition costs and boosting lifetime value. The company continued to close underperforming first-party retail stores and has reduced quarterly sales and marketing spending by 44% to its lowest level since 2020.
Furthermore, Peloton’s management identified $200 million in cost savings by the end of fiscal 2025, including reducing headcount and cutting spending on sales and marketing. The company has declared it is ahead of schedule and has achieved $100 million in savings, with the remaining $100 million coming over the remainder of FY 2025. Notably, Peloton initiated a one-time activation fee for used equipment, which increased the lifetime value of customers who bought used Peloton equipment via the secondary market. I expect these cost savings to support PTON’s bottom line and help streamline the company towards a renewed focus on profitability.
Several Strings in Peloton’s Bow
Peloton’s management has slashed costs and is now emerging as a leaner company. However, it also has other tricks up its sleeve to expedite its return to profitability. For example, Peloton has interesting initiatives like its partnership with TrueMed, which it says will make it easier for potential customers to use pre-tax HSA and FSA money to purchase exercise equipment.
Also, Peloton partnered with retail juggernaut Costco (COST) for its Peloton Bike+ to be available in over 300 Costco locations and via Costco’s website during the holiday season. We will likely hear more about this initiative during the company’s next quarterly earnings call — but if the partnership proves to be fruitful, it could become a share price catalyst.
Last but certainly not least is leadership. Any aspirational company needs good leadership, with Peloton securing industry veteran Peter Stern as its new CEO earlier this year. This could be another positive catalyst for the company, given his track record of co-founding Apple Fitness+ and significant experience growing subscription-based, fitness-related businesses.
Is Peloton Stock a Buy, Sell, or Hold?
Turning to Wall Street, PTON carries a Hold rating based on three Buys, fourteen Holds, and zero Sell ratings assigned in the past three months. Currently, PTON stock carries an average price target of $9.53, which implies 15.24% upside potential from current levels.
Balance Sheet Moves from Red to Black
The past few years have been a rollercoaster for Peloton as sentiment peaked, then nosedived as investors ran for the exit. However, against all expectations, Peloton has discreetly set the stage for an impressive turnaround. The stock has bounced back over 200% from its 52-week low and is now operating with new management and market strategy. In 2024, we saw Peloton emerge from the dead, and in 2025, I think the stock will continue to flourish on a healthy trajectory toward reestablishing its former market share. Even though the stock may never return to its heady highs, there is plenty of potential upside for opportunistic investors looking for a bargain.
