With a new year comes a fresh perspective on our investing strategies. And this means taking a look at your portfolio and figuring out which stocks to get rid of and which ones to keep. To be clear, this is probably something investors should be doing on a continual basis, but with the calendar turning, it's a good time to really spend some time reassessing what businesses you own and why you own them. 

Along those lines, if you still own Peloton Interactive (PTON 4.29%), it's time to sell this consumer discretionary stock. Here's why. 

Management missed the mark 

In its most recent fiscal quarter (Q1 2023, ended Sept. 30), Peloton generated revenue of $616.5 million (down 23% year over year) and a net loss of $408.5 million (down 9%), both of which seriously missed Wall Street expectations. These financial results continue a downward spiral for the fitness brand. 

Peloton was growing like wildfire in the years before and during the coronavirus pandemic. In four straight fiscal years (2018 through 2021), the business was able to at least double sales on an annual basis.  

As a direct result of these remarkable gains, the prior leadership team, led by then-CEO John Foley, incorrectly assumed that the surge in demand would continue once things normalized in a post-pandemic environment. Peloton invested heavily in boosting its manufacturing capabilities to build more bikes and treadmills, including the $420 million acquisition of Precor and a $400 million facility to bring production stateside in Ohio (a project that will be sold upon completion). 

However, demand dropped off a cliff. Peloton has had three straight quarters of greater than 23% year-over-year revenue declines. And the business has posted a cumulative net loss of $2 billion over the past six fiscal quarters. These are wildly negative trends that should scare investors away without question. 

Connected-fitness subscribers, or those who purchased a piece of equipment and pay the monthly membership fee, have stalled at just under 3 million. And the company's base of digital-only subscribers is shrinking. It's obvious that the allure and excitement of being a Peloton customer or a Peloton shareholder have evaporated.

Making matters more difficult for the company is the current economic climate, with many experts predicting a recession sometime this year. Peloton's struggles will certainly continue if this ends up being true. 

It's no wonder that the stock is down a jaw-dropping 95% since its January 2021 peak. 

Focus on demand trends 

Shareholders might be betting on a successful turnaround by the new CEO, Barry McCarthy. But as Warren Buffett, arguably the greatest investor ever, is known for saying, "Turnarounds seldom turn." This reality doesn't bode well for shareholders. 

Unless Peloton can start increasing revenue and its subscriber base going forward on a consistent and sustainable basis, it might be time to reconsider owning the stock. But there is no concrete evidence of this actually happening.

As I touched on earlier, the company's revenue has been falling. And in the just-ended and yet-to-be-reported quarter, management expects sales to total $713 million (at the midpoint), down 37% year over year. 

Shareholders might applaud new initiatives to drum up demand, like an equipment rental program, distribution partnerships with Amazon and Dick's Sporting Goods, and an agreement with Hilton Worldwide Holdings to put bikes in 5,400 hotels in the U.S. These have the potential to move the needle in theory. 

But if the brand were as strong as McCarthy claims it is, and demand was as robust as he tries to make the market believe, then why rely on third-party retailers to help sell the company's expensive exercise equipment? I understand that the overarching objective is to get equipment into as many households as possible to then make money over the long term from subscriptions, but if the bikes and treadmills aren't selling in the first place, this plan won't work. 

I think it's going to be a difficult path for Peloton to find lasting success. And shareholders who wish for things to improve should think again -- despite its extremely low valuation. If things do start to turn around for the beleaguered brand, it might warrant a closer look in the future.