Peloton Interactive (NASDAQ:PTON) surged during the pandemic as home fitness demand exploded, with revenue peaking at $4.1 billion in fiscal 2021. Since then, it has steadily declined, shedding market value and users. Sales have fallen amid economic pressures, while membership rolls have shrunk as consumers return to gyms or cut spending. Product updates, such as redesigned bikes and treads, have failed to capture broad interest in a price-sensitive market.
Following its fiscal second-quarter 2026 earnings release yesterday, Peloton reported further revenue shortfalls and subscriber losses, appearing as a weakened entity struggling to regain footing and potentially facing ongoing erosion. Is the connected fitness guru just a dead stock walking?
Earnings Reveal Ongoing Declines
Peloton’s Q2 results showed total revenue of $657 million, a 3% decrease from $674 million in the same quarter a year earlier. This figure fell $8 million short of the company’s own guidance and missed analyst expectations of $674 million. The decline stemmed mainly from weaker equipment sales to existing customers and some delivery delays that pushed $4 million in revenue into the next quarter.
Connected Fitness Products revenue, which includes hardware like bikes and treads, totaled $244 million, down 4% year-over-year. Subscription revenue reached $413 million, a 2% drop from the prior year, affected by fewer paid subscribers and reduced content licensing income, though partially offset by price increases.
The company posted a net loss of $39 million, or $0.09 per share, an improvement from the $92 million loss, or $0.24 per share, in the year-ago period, but worse than the expected $0.06 loss. Adjusted EBITDA, however, rose 39% to $81 million, exceeding guidance by $6 million, reflecting cost controls.
Membership levels, though, continued to erode at a worrisome pace. Ending paid Connected Fitness subscriptions stood at 2.661 million, a 7% decline from 2.875 million a year prior, though 6,000 above the guidance midpoint. Total members numbered 5.8 million, down 6% year-over-year. Average monthly churn for paid Connected Fitness subscriptions was 1.9%, up 50 basis points from last year, but better than anticipated after an October price hike.
New Products Fail to Spark a Revival
Management highlighted the October launch of the Peloton Cross Training Series, which refreshed the entire hardware lineup with features like swivel screens, improved saddles, and AI-driven coaching via Peloton IQ. The series includes the Cross Training Bike, Bike+, Tread, Tread+, and Row+, aimed at cross-training users. It received positive reviews from media outlets, but the products have not driven expected sales.
Equipment sales to existing members were lower than anticipated, extending upgrade cycles due to the durability of older hardware and high satisfaction among owners. Sales to new customers met projections, with over 70% of cross-training sales to bike owners being treads or rows. Third-party retail performance also lagged, contributing to the revenue miss.
The 4% drop in product revenue likely reflects Peloton’s premium pricing — bikes start at $1,495, treadmills at $2,995 — in an environment where consumers prioritize budgets amid inflation and competing fitness options. This pressure also hit subscriptions, with the 7% decline tied to fewer hardware activations and higher churn after the price increase.
Adding to its challenges, CFO Liz Coddington announced her departure effective in March to join a private clean tech energy company.
Key Takeaway
Despite some earlier Wall Street optimism — one analyst projected a 236% stock gain and consensus targets implying 70% upside — Peloton’s trajectory suggests continuing declines. Analysts have issued mixed ratings, but recent results undercut turnaround hopes. The stock plummeted 23% this morning, contributing to a 25% year-to-date drop from $6.12 at the start of the year, and is down 36% of the last 12 months, erasing gains from an early 2025 rally as the broader market recovered.
Peloton holds $1.18 billion in cash and equivalents, but faces $1.499 billion in total debt, including a $946 million term loan and $344 million in convertible notes. It also has $381 million in operating leasing liabilities. With guidance forecasting a 3% full-year revenue decline to $2.40 billion to $2.44 billion and an 8% drop in Q3 subscriptions, the connected fitness guru appears to be living on borrowed time.
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