Peloton Interactive (PTON 1.04%) is worthy of recognition. The business leveraged the internet, data, and its technological capabilities to innovate within the fitness industry. This powered the brand before and during the COVID-19 pandemic.
However, that momentum didn't last long. And shares now trade 98% below their peak (as of March 3).
There's one tangible reason that I haven't bought this consumer discretionary stock. And I probably never will.
Image source: Peloton.
Where's the growth?
Peloton's user base leans on the company's hardware, software, and content to run and pedal forward, among other wellness activities, with a goal to become better versions of themselves. Unfortunately, the business isn't operating with that kind of success.
Peloton has a problem returning to growth. This has been the case since its revenue peaked at $4 billion in fiscal 2021. In fiscal 2025, that figure was $2.5 billion. And for the current fiscal year, management projects it to drop year over year to about $2.4 billion.
What's alarming is that various strategies have been implemented, with no real results. For instance, in 2022, Peloton entered distribution partnerships with Amazon and Dick's Sporting Goods to reach more customers. More recently, in October 2025, the company revamped its entire product lineup and introduced personalized coaching powered by artificial intelligence (AI). However, the top line dipped 3% in the second quarter of 2026 (ended Dec. 31, 2025) during the key holiday shopping period.
NASDAQ: PTON
Key Data Points
It's easy to be bearish
John Foley, co-founder and previous CEO, said in 2020 that Peloton could get to 100 million subscribers. Clearly, that early management team severely overestimated the target market opportunity. As of Dec. 31, 2025, Peloton had 2.7 million connected fitness subscribers, which are customers who purchased a piece of equipment and pay the $49.99 monthly fee for the all-access membership, and 522,000 digital app members.
It's obvious now that the true market opportunity is a much smaller sliver of the overall population. The exact number is hard to pinpoint, though.
Perhaps a more favorable economic backdrop will help push consumers to decide that it's a smart move to spend thousands of dollars on a bike or treadmill. That could depend on lower interest rates or stronger consumer confidence. Blaming the macroenvironment, however, might be an excuse, as the U.S. economy is 43% larger than it was five years ago.
Peloton is looking more like a short-lived fitness fad that's past its prime. Unless the leadership team can get the company to start reporting durable growth again, that's why I believe this is a stock to avoid.
