Peloton Interactive (PTON) AI Stock Analysis

• Market Cap: $1.96B
• Dividend Yield: N/A
• Average Volume (3M): 14.74M
• Price to Earnings (P/E): ―
• Beta (1Y): 2.58
• Revenue Growth: -3.99%
• EPS Growth: 68.27%
• Country: US
• Employees: 2,853
• Sector: Consumer Cyclical
• Sector Strength: 60
• Industry: Leisure
• EPS (TTM): -0.78
• Shares Outstanding: 373,898,680
• 10 Day Avg. Volume: 12,232,627
• 30 Day Avg. Volume: 14,742,064
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 1.04
• Price to Cash Flow (P/CF): 6.40
• P/FCF Ratio: 6.40
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $9.79
• Price Target Upside: 90.10% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 17

Peloton's overall stock score reflects significant financial challenges, including negative profitability and high debt levels. Although the company shows positive cash flow improvement, the valuation remains unattractive due to negative earnings and lack of dividends. Technical analysis indicates a bearish trend, but the earnings call reveals a positive recovery trajectory with improved metrics and cost savings. These factors result in a moderately low overall stock score.

Positive Factors

Cost Structure

PTON has reworked its cost structure taking $600M in costs out and ending FY24 with $1.7B in operating costs, and we are estimating FY25 to end with $1.25B in operating costs.

Leadership Position

Peloton is the clear leader in the connected fitness industry, which they invested in early on and built a 6M loyal member base that has a high-margin recurring revenue stream.

Product Sales

Peloton's new Costco partnership drove more Bike+ sales than any other third-party retail partner, highlighting the benefit of distribution and newer demand partners.

Negative Factors

Demand Uncertainty

There is uncertainty about what steady state demand is for Peloton post-COVID, which prevents a double-digit forward EBITDA multiple upgrade.

Marketing Spend

Marketing efficiency is key to growth, and there is concern that marketing spend will take another step down as the company targets a higher LTV-to-CAC ratio.

Subscriber Growth

FY25 subscriber growth is impacted by multiple business changes, such as reduced incentives and increased hardware prices, which are expected to normalize next year.

Peloton Interactive Business Overview & Revenue Model

Company Description

Peloton Interactive, Inc. provides interactive fitness products in North America and internationally. It offers connected fitness products with touchscreen that streams live and on-demand classes under the Peloton Bike, Peloton Bike+, Peloton Tread, and Peloton Tread+ names. The company also provides connected fitness subscriptions for various household users, and access to various live and on-demand classes, as well as Peloton Digital app for connected fitness subscribers to provide access to its classes. As of June 30, 2021, it had approximately 5.9 million members. The company markets and sells its interactive fitness products directly through its retail showrooms and at onepeloton.com. Peloton Interactive, Inc. was founded in 2012 and is headquartered in New York, New York.

How the Company Makes Money

Peloton makes money through a dual revenue model comprising hardware sales and subscription services. The company generates significant income from selling its high-end exercise equipment, such as the Peloton Bike and Tread, which are equipped with screens for streaming workouts. In addition to one-time hardware sales, Peloton's subscription model is a key revenue stream, offering users access to a wide array of live and on-demand classes for a monthly fee. This subscription service not only enhances user engagement but also provides a recurring revenue stream. Peloton also benefits from apparel sales and strategic partnerships that enhance its brand visibility and reach.

Peloton Interactive Financial Statement Overview

Summary

Peloton faces significant financial hurdles with negative profitability, high debt levels, and a lack of equity. Although cash flow shows signs of recovery, the company needs to address its profitability issues and debt burden to establish a stable financial footing. The lack of equity is a critical concern, reflecting potential solvency risks. Peloton must continue to improve its operational efficiency and manage its liabilities to ensure long-term sustainability.

Income Statement

Peloton's income statement shows significant challenges with profitability. The gross profit margin for the TTM (Trailing-Twelve-Months) stands at 46.4%, which indicates a moderate ability to cover direct costs. However, the company struggles with negative net profit margins, with a TTM net income of -$290.7 million, highlighting ongoing losses. Although there are improvements in EBIT and EBITDA margins from the previous year, they remain negative, indicating continued operational challenges.

Balance Sheet

The balance sheet reveals a precarious financial position. Peloton's total debt is significantly higher than its stockholders' equity, leading to a negative equity situation. This high leverage poses a risk to financial stability. The absence of stockholders' equity in the most recent report suggests potential solvency issues. The equity ratio is uncalculable due to the lack of equity, reflecting a weak capital structure.

Cash Flow

The cash flow statement shows some positive aspects, with operating cash flow turning positive in the TTM at $163.5 million, suggesting improvements in cash-generating capability. The free cash flow is also positive at $151.3 million, indicating effective cash management. Despite these improvements, the company still faces challenges with the operating cash flow to net income ratio, as net income remains negative.

Breakdown
TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement		Total Revenue
2.62B	2.70B	2.80B	3.58B	4.02B	1.83B
	Gross Profit
1.22B	1.21B	923.60M	698.40M	1.45B	836.80M
	EBIT
-176.00M	-529.00M	-1.20B	-1.64B	-187.90M	-80.90M
	EBITDA
-60.00M	-330.80M	-1.04B	-2.53B	-119.60M	-26.20M
	Net Income Common Stockholders
-290.70M	-551.90M	-1.26B	-2.82B	-189.00M	-71.70M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
829.00M	697.60M	813.90M	1.25B	1.61B	1.75B
	Total Assets
2.11B	2.19B	2.77B	4.04B	4.49B	2.98B
	Total Debt
2.03B	2.08B	2.36B	2.37B	1.51B	555.10M
	Net Debt
1.20B	1.38B	1.55B	1.12B	377.30M	-480.40M
	Total Liabilities
2.61B	2.70B	3.06B	3.44B	2.73B	1.30B
	Stockholders Equity
-497.20M	-519.10M	-295.20M	603.70M	1.75B	1.68B
Cash Flow		Free Cash Flow
151.30M	-85.80M	-470.00M	-2.36B	-491.90M	220.00M
	Operating Cash Flow
163.50M	-66.10M	-387.60M	-2.04B	-239.70M	376.40M
	Investing Cash Flow
23.90M	26.80M	-69.90M	171.00M	-585.10M	-741.30M
	Financing Cash Flow
-107.20M	-94.40M	76.80M	2.02B	916.80M	1.24B

Peloton Interactive Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 5.15
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PTON, the sentiment is Negative. The current price of 5.15 is below the 20-day moving average (MA) of 6.32, below the 50-day MA of 7.32, and below the 200-day MA of 6.38, indicating a bearish trend. The MACD of -0.32 indicates Negative momentum. The RSI at 39.27 is Neutral, neither overbought nor oversold. The STOCH value of 17.38 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PTON.

Peloton Interactive Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
YETI	75 Outperform	$2.50B	13.98	24.01%	―	10.32%	6.05%
OSW	74 Outperform	$1.59B	21.88	14.74%	0.79%	12.72%	―
LTH	72 Outperform	$5.87B	38.08	6.42%	―	18.24%	99.18%
PLNT	61 Neutral	$7.79B	45.15	-79.88%	―	10.30%	23.45%
Sector *	59 Neutral	$10.97B	9.83	-1.56%	4.06%	1.31%	-16.49%
PTON	47 Neutral	$1.96B	―	58.47%	―	-3.99%	68.27%
XPOF	43 Neutral	$363.96M	―	22.27%	―	0.34%	-309.65%

Peloton Interactive Corporate Events

Peloton Interactive Strengthens Leadership with New Director

On January 16, 2025, Peloton Interactive appointed Peter Stern, the CEO and President, as a Class II director on its Board of Directors. This appointment signifies a consolidation of leadership roles, potentially enhancing strategic decision-making and stability within the company’s governance structure.