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Globe and Mail
15-05-2025
- Business
- Globe and Mail
Is Peloton Stock Headed to $10 in 2025?
While Peloton stock (PTON) has rebounded sharply from its April lows, at which it briefly joined the penny stock category, it is still down nearly 26% for the year. The company posted mixed earnings for its fiscal Q3 2025 earlier this month, and the stock plunged following the confessional. While brokerages including Goldman Sachs and Telsey Advisory cut Peloton's target price following the Q3 earnings, Macquarie has upgraded the stock to an 'Outperform' while assigning a target price of $10. The firm's target price is slightly higher than Peloton's mean target price of $9.72 and represents upside potential of over 50%. PTON Stock Forecast Wall Street analysts have gradually turned bullish on Peloton stock this year. Eight analysts now rate it a 'Strong Buy,' while the corresponding number three months back was just four. The remaining 12 analysts rate PTON as a 'Hold' or some equivalent. Along with analysts, some fund managers have also warmed up to Peloton. For instance, legendary investor David Einhorn of Greenlight Capital finds Peloton stock undervalued and has put money where his mouth is. His fund is now among Peloton's top 10 investors, owning a 2.8% stake in the fitness equipment company. Peloton is a pandemic-era darling whose sales and, by extension, share price, soared between 2020 and 2021. At its peak, Peloton's market cap was over $50 billion. Cut to 2025, and its market cap is under $3 billion, and the stock has been moving in and out of the penny stock category. Peloton Is Working on a Turnaround Peloton has been working on a turnaround for the last couple of years. In February 2022, Barry McCarthy – the former Netflix (NFLX) and Spotify (SPOT) executive – took over as CEO, replacing the company's co-founder, John Foley. Under his leadership, Peloton took several actions like doubling down on third-party sellers, giving up manufacturing ambitions, and selling bikes on rent. As is the case with practically every turnaround, Peloton slashed its workforce and cut down on its operating expenses. These strategies helped the company pare its losses and turn free cash flow positive. Earlier this year, Apple Fitness+ (AAPL) co-founder Peter Stern took over the baton from McCarthy and is now leading the next leg of Peloton's turnaround. He is focusing on growth, and during the recent earnings call listed four key priorities. These are: Improving outcomes for members: Peloton is enhancing the value proposition for users. It offers personalized coaching and caters to members' mental well-being through meditation content. Increasing its visibility: Peloton has expanded its visibility and increased its presence in gyms and hotels. It has also been adding to the list of third-party partners to increase its distribution network. In addition, the company tested a microstore in Nashville, which it said exceeded the average revenue of its much bigger retail stores in North America during Q3. The company intends to test more such microstores, which would help it expand its network at a lower cost. Creating members for life: By deepening connections with members, Peloton wants to retain them for a longer time and increase the lifetime value of its customers. Operating efficiency: Through relentless cost cuts and optimized pricing and promotion strategies, Peloton is looking to increase its operating efficiency. The company said that it is ahead of its target to cut costs by $200 million in the current financial year. Should You Buy Peloton Stock? Peloton is a much different business now than it was during the pandemic, and two-thirds of its revenues come from the high-margin subscription business. However, on the flip side, its product revenues have been sliding, and member growth has sagged. The company's revenues fell in the last three fiscal years, and consensus estimates call for a year-over-year decline in the current as well as the next fiscal year. Meanwhile, thanks to Peloton's aggressive cost-cutting actions, it has posted positive free cash flow and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for five consecutive quarters. The company expects its free cash flow in the current fiscal year to be around $250 million, which implies a price-free cash flow multiple of under 11x. The multiples look reasonable if not outright tempting given Peloton's anemic growth (or rather degrowth). Overall, I believe the risk-reward looks balanced for Peloton at these levels, especially for investors who can stomach the near-term volatility. The company's turnaround is on the right track, and as it turns the corner on its top-line growth while maintaining the strong free cash flows, the stock should head into double digits.
Yahoo
09-05-2025
- Business
- Yahoo
Peloton Interactive Inc (PTON) Q3 2025 Earnings Call Highlights: Navigating Challenges with ...
Paid Connected Fitness Subscriptions: Ended the quarter with 2.88 million, a net increase of 5,000, exceeding guidance by 10,000 subscriptions. Revenue: Total revenue of $624 million, with $205 million from Connected Fitness products and $419 million from subscriptions. Gross Margin: Total gross margin was 51%, an increase of 780 basis points year-over-year. Connected Fitness Products Revenue: Decreased 27% year-over-year to $205 million. Subscription Revenue: Decreased 4% year-over-year to $419 million. Advertising and Marketing Spend: Decreased 46% year-over-year. Adjusted EBITDA: $89 million, $4 million above the high end of guidance, and an $84 million improvement year-over-year. Free Cash Flow: Generated $95 million in the third quarter, an increase of $86 million year-over-year. Unrestricted Cash and Cash Equivalents: Ended the quarter with $914 million, an increase of $85 million quarter-over-quarter. Net Debt: Reduced to $585 million, a 35% year-over-year decrease. Operating Expenses: Total operating expenses were $351 million, a 23% decrease year-over-year. Sales and Marketing Expense: $106 million, a decrease of 37% year-over-year. General and Administrative Expense: $151 million, a decrease of 1% year-over-year. Research and Development Expenses: $60 million, a decrease of 22% year-over-year. Warning! GuruFocus has detected 7 Warning Signs with PTON. Release Date: May 08, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Peloton Interactive Inc (NASDAQ:PTON) exceeded guidance on key metrics, including paid Connected Fitness subscriptions and adjusted EBITDA. The company achieved significant cost reductions, tracking ahead of a $200 million cost restructuring plan, which improved profitability. Peloton Interactive Inc (NASDAQ:PTON) reported a positive free cash flow of $95 million in Q3, marking the fifth consecutive quarter of positive free cash flow. The company observed strong engagement with new features, such as Pace Target on the treadmill, with over 80% of Tread users utilizing it. Peloton Interactive Inc (NASDAQ:PTON) successfully expanded its presence in commercial gyms through a pilot program with Precor, enhancing its reach. Connected Fitness products revenue decreased by 27% year-over-year, driven by lower sales and deliveries across all product categories. The company experienced a net decrease of 12,000 paid app subscriptions in the quarter. Peloton Interactive Inc (NASDAQ:PTON) faces challenges in innovating hardware to complement its software and content offerings. The company is dealing with macroeconomic uncertainties that could impact demand for Connected Fitness hardware sales. Peloton Interactive Inc (NASDAQ:PTON) has $200 million in convertible notes due in February of next year, which requires careful financial planning. Q: How is Peloton incorporating AI to shape its future? A: Peter Stern, CEO, explained that AI is being used to enhance customer support through intelligent agents, improve translation capabilities for their vast content library, and empower personalized workout plans. AI is seen as a tool to give human superpowers, allowing Peloton to offer more personalized and efficient services to its members. Q: When will Peloton expand into new markets? A: Peter Stern, CEO, stated that while Peloton is currently focused on increasing penetration in existing markets like the UK, Canada, Germany, Austria, and Australia, they are also exploring adjacent markets where the same languages are spoken. Expansion will be considered once they achieve meaningful scale and profitability in current markets. Q: What progress has been made on key initiatives since Peter Stern became CEO? A: Peter Stern highlighted significant cost reductions, improved unit economics, and increased marketing efficiency. The focus has been on earning the right to grow by stabilizing the business, improving member outcomes, and expanding into new channels like retail and gyms. Q: How is Peloton addressing macroeconomic challenges and consumer slowdown? A: CFO Liz Coddington noted that while there was some softness in sales, the business remains resilient due to its subscription model. Peloton offers lower-priced options and financing to attract price-sensitive customers. The fitness industry has historically shown resilience during economic downturns. Q: What are Peloton's plans for pricing and cost discipline to return to growth? A: Peter Stern mentioned that Peloton is reviewing equipment pricing and considering a potential subscription price increase, given the value they provide. The company is focused on optimizing pricing and promotions to enhance competitiveness and shareholder returns. Q: How is Peloton planning to improve its marketing strategy? A: Peter Stern explained that Peloton is taking a holistic approach to marketing, focusing on the entire customer lifecycle from awareness to retention. The strategy includes optimizing media spend, leveraging partnerships, and using advanced measurement techniques to improve subscriber acquisition and retention. Q: What are the expectations for fiscal 2026 free cash flow? A: CFO Liz Coddington stated that while fiscal 2025 is benefiting from a net working capital tailwind, fiscal 2026 is expected to generate meaningful positive free cash flow, albeit with a more modest tailwind. Q: How is Peloton addressing its balance sheet and capital allocation? A: Liz Coddington highlighted that Peloton is focused on deleveraging its balance sheet, with plans to pay down debt and invest in strategic growth initiatives. The company is also considering potential inorganic growth opportunities and, eventually, capital return alternatives like dividends and share buybacks. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
San Francisco Chronicle
08-05-2025
- Business
- San Francisco Chronicle
Peloton: Fiscal Q3 Earnings Snapshot
NEW YORK (AP) — NEW YORK (AP) — Peloton Interactive Inc. (PTON) on Thursday reported a loss of $47.7 million in its fiscal third quarter. On a per-share basis, the New York-based company said it had a loss of 12 cents. The results did not meet Wall Street expectations. The average estimate of eight analysts surveyed by Zacks Investment Research was for a loss of 6 cents per share. The exercise bike and treadmill company posted revenue of $624 million in the period, surpassing Street forecasts. Seven analysts surveyed by Zacks expected $619.7 million. _____
Washington Post
08-05-2025
- Business
- Washington Post
Peloton: Fiscal Q3 Earnings Snapshot
NEW YORK — NEW YORK — Peloton Interactive Inc. (PTON) on Thursday reported a loss of $47.7 million in its fiscal third quarter. On a per-share basis, the New York-based company said it had a loss of 12 cents. The results did not meet Wall Street expectations. The average estimate of eight analysts surveyed by Zacks Investment Research was for a loss of 6 cents per share.
Yahoo
02-05-2025
- Business
- Yahoo
Why Peloton Interactive, Inc. (PTON) Soared on Tuesday
We recently published an article titled . In this article, we are going to take a look at where Peloton Interactive, Inc. (NASDAQ:PTON) stands against the other stocks that soared on Tuesday. The stock market finished Tuesday's trading on a positive note with all major indices ending in the green, buoyed by the influx of corporate earnings results. The Dow Jones grew by 0.75 percent, the S&P 500 rose by 0.58 percent, and the Nasdaq was up by 0.55 percent. Ten companies mirrored the broader market optimism, leading the charge with strong gains, predominantly driven by impressive earnings results. To come up with the list, we considered only the stocks with a $2-billion market capitalization and $5-million trading volume. A group of people in a fitness class with connected fitness products in a studio or gym. Peloton Interactive, Inc. (NASDAQ:PTON) grew its share prices by 5 percent on Tuesday, a sixth straight day, to end at $6.93 apiece as investor sentiment was boosted by an investment firm's rating upgrade for the company. On Monday, Truist Securities upgraded its rating for Peloton Interactive, Inc. (NASDAQ:PTON) to Buy from Hold previously, while giving it a price target of $11, or a 59-percent upside from its latest closing price. Truist said the upgrade was based on its improving fundamentals, cleaner balance sheet, and a clearer path to sustained profitability under new leadership, and that its efforts to reduce operating expenses and stabilize cash flow are starting to bear fruit. Meanwhile, Peloton Interactive, Inc. (NASDAQ:PTON) will release its key financial and operational highlights before the market opens on Thursday, May 8, 2025, where investors will be looking out for any cues on the company's outlook for the next quarter and the rest of the year amid the growing global economic uncertainties. Overall PTON ranks 9th on our list of the stocks that soared on Tuesday. While we acknowledge the potential of PTON as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than PTON but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock. READ NEXT: and . Disclosure: None. This article is originally published at . Sign in to access your portfolio
