There's no denying the ultimate goal of investors: to buy stocks that can help them generate huge wealth over time. In fact, some might even want their investments to get them to a seven-figure net worth.
Maybe Peloton Interactive (PTON) has a chance to do that. As of this writing, shares of this once-booming consumer-facing enterprise trade 96% below their peak from January 2021 even though they have soared 120% in the past 12 months.
If you buy this stock now, could you become a millionaire by 2035?
Image source: Peloton.
Minimizing losses is management's top priority
Once on top of the world, Peloton has come crashing back down to Earth. One reason the market has soured on the stock is because the company has struggled to achieve profitability. Its net loss surged to an alarming $2.8 billion in fiscal 2022.
However, Peloton is making progress when it comes to the bottom line, thanks to an intense focus on operational discipline. In Q3 2025 (ended March 31), the net loss totaled $48 million, down from a net loss of $167 million in the year-ago period. The company is ahead of schedule in hitting its goal of finding $200 million in yearly run-rate cost savings.
The market must be rewarding the company for steadily fixing its financial picture, as evidenced by the share price more than doubling in 12 months. Cleaning up the balance sheet helps. As of March 31, Peloton carried $585 million of net debt on the books, down 35% year over year.
Generating sustainable profits will still be a challenge. A business can only reduce its expense so much. But management is optimistic. "We are focused on continuing to right-size our cost structure and de-risk our balance sheet," CEO Peter Stern said in the Q3 2025 press release. "These efforts will drive profitability and free cash flow." Time will ultimately tell.
Boosting demand remains a key issue
During the depths of the pandemic, Peloton was registering monster demand from consumers looking for ways to work out from the comfort of their homes. These days, the interest has fallen off a cliff.
Peloton has a demand problem, which is that, despite the leadership team highlighting superb Net Promotor Scores of above 70 for its cardio products (considered excellent), revenue in Q3 came in at $624 million, representing a year-over-year dip of 13%. This figure is half the number from the same period just four years ago. Even worse, the amount of connected-fitness subscribers and paid digital app subscribers fell from Q3 2024.
Peloton's monster rise and troubling fall point to how difficult it is to achieve lasting success in the fitness industry. Consumers seem to always be enamored with the shiny new object, which can be a short-lived fad. And it's challenging for companies that are betting on these people sticking to their exercise plans.
Is this a classic value trap?
With the S&P 500 still not far from its all-time high, it's understandable if some investors are salivating at how beaten down Peloton shares are. After all, they are trading at a dirt cheap price-to-sales ratio of 1.1. This indicates that the market remains pessimistic about the business and its outlook.
For what it's worth, this multiple is 94% below the peak valuation achieved in January 2021. What's more, Peloton's current market capitalization of $2.9 billion pales in comparison to the $49.3 billion it once had.
The stock's performance in the past 12 months might have some investors bullish that the good times can continue. But from a purely fundamental perspective, it's extremely difficult to have a positive view.
The valuation might be too hard to ignore. However, I believe Peloton stock is a value trap that has a slim chance of turning investors into millionaires in the next decade.
