Peloton: "Growing Again"

Note: See the “PTON” tab on the TSOH website for all prior Peloton research

In May 2024, when Barry McCarthy announced his time at Peloton had come to an end, his letter to the team included the following: “In my very first letter as Peloton’s CEO in May 2022, I outlined three priorities for the business: 1) stabilizing the cash flow; 2) getting the right people in the right roles; and 3) growing again. Together we’ve achieved the first two of these goals. I’m counting on you to achieve the third goal, growing again, next year [FY25].”

The company has fallen well short of that third objective (growing again): revenues are expected to decline by nearly 10% this year, to ~$2.47 billion; this marks the fourth consecutive year of lower revenues for Peloton, with a cumulative decline of ~40% from the 2021 peak of more than $4.0 billion.

As we examine the segment results, it reveals important details about how the business evolved over the past five years. In a sentence, the financials and the strategic vision are greatly changed from what they once were; with it, I think that an interesting opportunity may arise for long-term investors.