On Sept. 20, connected-fitness company Peloton Interactive (PTON 3.77%) announced a new product: a rowing machine simply called Peloton Row. Some analysts and observers believe it will be a "key part" of the company's growing portfolio of products. For others, its release felt "anticlimactic."

But for me, launching the Peloton Row is the most baffling thing the company has done since I became a shareholder about a year and a half ago. The decision to bring it to market now seems to run completely contrary to the priorities Peloton's new management has been harping on in recent months. And I'm frankly not sure what it all means. 

Meet the Peloton Row

Peloton Row is a connected-exercise device for rowing. On its large screen, exercisers can stream video content and track their stats. The machine comes equipped with technology to help users improve their form. And it's already available to purchase for $3,195.

For reviewer Victoria Song of tech-focused website The Verge, Peloton's rowing machine reveal felt anticlimactic because this possibility has been discussed for years. But there's a really good reason why the company hadn't released a rowing machine before.

Jill Woodworth is no longer Peloton's chief financial officer. But in 2020, Woodworth spoke with Barron's about a rowing machine and said, "I would put rowing as a much smaller TAM [total addressable market] opportunity than Bike and much, much smaller than Tread." Bike and Tread are Peloton's stationary bike and treadmill products. And for the record, Woodworth believed the treadmill category was potentially two to three times the size of the stationary-bike category.

According to Statista, 8% of U.S. households have bought a rowing machine during the COVID-19 pandemic. This compares to 17% that purchased treadmills, confirming Woodworth's statement on the disparate sizes of the markets for those categories.

Citi analyst Ronald Josey believes Peloton Row will be a key part of Peloton's growing portfolio, according to TheFly.com. That portfolio also includes the newly updated personal-training device Guide. And Josey may be right. However, the point still stands that the rowing category is small. I wouldn't expect Peloton Row to move the needle for the company.

Moreover, at $3,195, Peloton Row occupies the top tier in its category.  The high-end product of established competitor Hydrow comes in at $2,495 -- more than 20% cheaper. 

Consider also that (according to Peloton's filings with the Securities and Exchange Commission) most Peloton users buy their machines with credit cards. This supports the idea that these pricey products are very discretionary purchases for most people. With the global economy on shaky ground right now, it's fair to wonder how many people will actually spring for one of the most expensive options in this lower-interest exercise category.

Here's the even more baffling part

If times were good for the company, I think there still would be a good case for launching Peloton Row. Even with all the issues I've outlined, it makes sense for a connected-fitness company to have a more complete portfolio of products. Remember that the company is aiming for 100 million members long term. Rowers can help it reach that lofty goal even if they make up a small percentage of the total.

However, times decisively aren't good for Peloton at the moment. In its fiscal 2022, which ended June 30, sales stalled, inventory skyrocketed, a management shakeup was necessitated, and the company ultimately registered a $2.7 billion loss from operations.

New CEO Barry McCarthy has made it clear that getting to positive cash flow is now the company's top priority. In fact, on the conference call to discuss financial results for fiscal 2022's third quarter, McCarthy said, "Positive cash flow trumps growth" for fiscal 2023. As such, we should expect the company to forego promising growth opportunities like international expansion until solves the cash flow issue.

In my opinion, if Peloton wanted to pursue growth now, investing in international expansion would be a more attractive strategy than launching a rowing device. However, to be fair, perhaps launching a rowing device is a more manageable tactic from a cash-flow perspective. Building operations internationally can be expensive. And the company recently returned to outsourcing product manufacturing, which could make Peloton Row a less capital-intensive endeavor.

Rowing against the current

Peloton's new management is frantically trying to paddle the company out of turbulent waters. But the launch of Peloton Row has left me unsure about which direction it's paddling. Peloton Row almost definitely won't help it get to positive cash flow and could even hold it back.

Expanding a market opportunity can be a great move for a company. But I don't believe this was the right time to launch Peloton Row. If you're watching Peloton stock from the sidelines, I would keep watching until we get more clarity about management's actual game plan for its fiscal 2023.