At some point, connected fitness company Peloton (PTON -4.57%) needs to decide what it wants to be. Is it a luxury fitness equipment company selling to those who don't think twice about dropping thousands of dollars on shiny new products? Or is a mainstream fitness company looking to grow its subscriber base into the tens of millions?

With CEO Barry McCarthy taking over earlier this year, it seemed like Peloton was moving toward becoming a mainstream brand. McCarthy set his sights on eventually having 100 million paying members. That's not a goal that's to possible achieve if subscriptions are tied to expensive exercise equipment.

Not so fast

Peloton's announcement on Tuesday that it was launching the Peloton Row, the company's first rowing machine, is downright baffling. Peloton is drowning in inventory it can't sell. Demand for its bikes and treadmills has collapsed. Peloton's hardware revenue declined by 55% year over year in the fourth quarter of fiscal 2022 to $295.6 million, and the company is sitting on $1.1 billion worth of inventory.

The absolute last thing on this planet Peloton needs right now is another hugely expensive line of exercise equipment. And yet, here we are. The Peloton Row will cost an eye-watering $3,195 when it starts shipping later this year, a price tag that at least includes delivery and setup.

Just like all other Peloton equipment, the Peloton Row requires a $44 monthly subscription to access content on the built-in screen. Here's the problem: High-quality alternatives are not just a little cheaper, they're immensely cheaper and don't gate core features off behind a mandatory subscription.

Did Peloton do any market research?

Rowers from Concept2, a company that has been around for decades, are a popular choice. The RowErg, previously known as the Model D, is sold for $990 plus shipping on the company's website, or for $1,130 with free shipping on Amazon. It has glowing reviews, earning a 4.9/5-star rating on Amazon, with over 11,000 ratings.

This rower from Concept2 is about one-third the price of the Peloton Row, and it doesn't require any kind of subscription. It doesn't have a built-in screen, but there is no shortage of screens in peoples' homes. A TV, tablet, or smartphone will work just as well, and if you need content for your rowing sets, free and inexpensive options are widely available.

I'm sure that the Peloton Row is a high-quality, durable piece of equipment. If it had been released in 2020, when demand for in-home exercise equipment was insatiable amid the pandemic, it may have even sold well. But given that it's triple the price of a high-quality, well-liked alternative, it's hard to imagine Peloton's foray into the rower market ending well.

Stay away from Peloton stock

Shares of Peloton are down almost 95% from their pandemic heyday. This massive decline may create the illusion that the stock is cheap, but that's simply not the case. Peloton is still valued at more than $3 billion. The company did $3.58 billion in revenue in fiscal 2022, but that number will almost certainly decline next year. Peloton's net loss for the full year was a staggering $2.8 billion, and free cash flow was a loss of $2.3 billion.

Peloton is working to cut costs, but cost-cutting won't solve the company's demand problem. Neither will a $3,000-plus rowing machine. If Peloton had a coherent strategy, it would be easier to get behind the turnaround story. But with the company targeting a huge subscriber base and then turning around and announcing a product that is almost comically overpriced, Peloton looks rudderless. Going into a potential recession, the rudderless usually don't fare all that well.