Shares of Peloton Interactive (PTON 2.20%), the long-suffering maker of high-end exercise equipment, had another down year in 2025 as a combination of continued revenue declines, subscriber declines, and uncertainty around its future weighed on the stock. Additionally, the new CEO, Peter Stern, struggled to turn the business around. Stern was also the company's fourth CEO in less than five years, showing the post-pandemic meltdown has proven difficult for any manager to overcome.
As a result, the stock finished the year down 29%, according to data from S&P Global Market Intelligence.
As you can see from the chart below, it was a volatile year for Peloton, but a recovery in the middle of the year faded toward the end.
What happened with Peloton last year
Peloton's slide last year was partly bad timing. The stock soared toward the end of 2024 along with other growth stocks in a wave of bullish sentiment as investors hoped for lower taxes and business-friendly policies under Trump.
Peloton finished its fiscal 2025 year in June with members falling from 6.4 million to 6 million and subscribers falling from 2.976 million to 2.8 million.
Not surprisingly, revenue was also down 8% to $2.49 billion. However, management has been focused on cutting costs, and its generally accepted accounting principles (GAAP) operating loss significantly improved from $529 million to $36.2 million. Gross profit also improved despite the decline in profit, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) jumped from just $3.5 million a year ago to $403.6 million, a clear sign of progress.
However, it's hard to buy into the company's turnaround as long as revenue is falling and management predicted a slight decline for fiscal 2026, calling for revenue of $2.4 billion-$2.5 billion, a decline of 2% at the midpoint.
Image source: Peloton.
What's next for Peloton
Peloton's most recent results, for the quarter ended in September, showed a 6% decline in revenue to $551 million, but it did report GAAP net income of $14 million, driven by a new equipment lineup and Peloton IQ, an AI-powered personalized workout planner.
Peloton does seem to be on the right track here, but it's hard to buy into the recovery until revenue is moving steadily higher. The business also still appears to be in a weak position, following the post-pandemic hangover as its pool of potential customers is likely much smaller than it was before the pandemic.
