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Peloton continues to struggle with declining revenue and a shrinking subscriber base.
The business was profitable last quarter, but its strategic initiatives aren’t boosting demand.
Peloton Interactive (NASDAQ: PTON) was once a booming business. It was growing rapidly before the COVID-19 pandemic. And the health crisis supercharged demand for its at-home exercise equipment. As the economic backdrop normalized, though, the company has struggled mightily to get back on track.
As of this writing, the consumer discretionary stock trades 96% below its all-time high, which was established in January 2021. At under $7 per share right now, is Peloton a golden opportunity for investors or a value trap?
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Image source: Peloton.
The company is still heading in the wrong direction. And that's why I believe Peloton stock is a value trap, even though it trades at a price-to-sales ratio of just over 1. That's a very cheap valuation from a historical perspective.
In the most recent quarter (Q1 2026 ended Sept. 30), Peloton's revenue declined 6% year over year to $551 million. This was after sales fell in fiscal 2022, 2023, 2024, and 2025. And the subscriber base keeps shrinking.
Peloton has leaned more on its subscriptions, which drive the bulk of its revenue. The hardware lineup was recently refreshed. And artificial intelligence is being leveraged to personalize users' training plans. However, they haven't helped drive top-line gains.
For what it's worth, the business has gotten in much better shape financially. It reported positive GAAP earnings last quarter. But it's extremely difficult to believe Peloton stock can be a winner over the next five years.
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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Peloton Interactive. The Motley Fool has a disclosure policy.
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