Top Picks For 2025: Peloton Interactive

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I’m used to selecting obscure, totally unknown companies in one of my services. But I think there’s an interesting story with the household name Peloton Interactive Inc. (PTON) that’s worthy of sharing, observes Tyler Laundon, editor of Cabot Early Opportunities.

Peloton was a massive stock during the pandemic, when everybody was stuck at home and exercise equipment and access to social networks beyond the walls of the home was hugely important. However, it has mostly been a disaster since the pandemic ended.

Revenue has been shrinking over the last three fiscal years (which end in June), first by -11% (2022), then -22% (2023), and then by -3.6% (2024), when revenue was only $2.59 billion. That’s a far cry from the $4 billion-plus of 2021.

Still, Peloton operates the world’s largest immersive and interactive fitness platform, connecting 3.7 million subscribers with instructors from a wide variety of disciplines. The company’s Bike, Tread, and Rower make fitness approachable, entertaining, convenient, and social. Activities range from indoor cycling, running, walking, hiking, rowing, and yoga to bootcamp, stretching, strength, meditation, and more.

That said, Peloton’s subscriber growth has stalled. As the turnaround story unfolds, we’ll be looking for two things: (1) Can the company get subscriber growth going again, and/or (2) Can they monetize the existing sub base better? There are a number of potential catalysts that could juice growth, and the stock.

First is a new CEO, Peter Stern, who started on Jan. 1. He has extensive experience in the health and wellness space (he co-founded Apple Fitness Plus), with consumer hardware, software, and subscription services, and is a big fan and user of Peloton’s products.

Second is renewed focus on the Tread market, which management believes is twice the size of the Bike market.

Third is a renewed focus on men. Two-thirds of current users are women. Seems like there's room for improvement on the guy side of the equation.

Recent consensus estimates suggest a fiscal 2025 revenue decline of -8.6% to $2.48 billion, then modest revenue growth in the low single digits in fiscal 2026. Adjusted EPS could be in the $0.20 range in both fiscal 2025 and 2026, though there are a lot of inputs that can skew the eventual figure higher or lower.


Bottom Line

Peloton feels like a fairly obvious turnaround play that’s still in the early innings and still has plenty of skeptics. That should translate into a very nice run in the stock, provided reasonable execution by the management team.


About the Author

Tyler Laundon is chief analyst of the limited-subscription advisory, Cabot Small-Cap Confidential. He has spent his entire career managing, consulting, and analyzing start-up and small-cap companies. His hands-on experience has taught Tyler that the development of a superior business model is the biggest factor in determining a company's long-term success.

Accordingly, his research focuses on assessing the viability of management's growth strategies, trends in addressable markets and achievement of major developmental milestones.Tyler's small-cap portfolios favor a high allocation to stable, high growth companies, upon which he layers strategic purchases of higher risk, event-driven investments. He first began publishing his analysis of small-cap opportunities in 2009. Since 2012, he has led his subscribers into 10 doubles.

Between 2012 and September, 2015 his small-cap recommendations generated cumulative returns of over 2,300%, including both winners and losers, and outperformed the Russell 2000 Index by an average of 28% per year.

Prior to joining Cabot, Tyler founded and operated a small business for 15 years. He then worked as a consultant for start-up technology companies, as well as Vermont's largest health care institution. From 2009 to 2015, he was the chief analyst of growth stocks at Wyatt Investment Research, where his research spanned the full spectrum of the growth stock universe, from micro-cap start-ups to multi-national mega-caps.

Tyler holds a B.S. and MBA from The University of Vermont, where he graduated Valedictorian. He has been a long-time contributor to the Wall Street's Best Investments, has been quoted by U.S. News & World Report, and has presented investing ideas and strategies for The Money Show and Bloomberg Markets LiveINSIGHTS.


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