Peloton Interactive, Inc. (PTON): A Bear Case Theory

We came across a bearish thesis on Peloton Interactive, Inc. on TickerTrends Research’s Substack by TickerTrends. In this article, we will summarize the bears’ thesis on PTON. Peloton Interactive, Inc.'s share was trading at $5.84 as of January 28th. PTON’s forward P/E was 10.57 according to Yahoo Finance.

Peloton Interactive, Inc. provides fitness and wellness products and services in North America and internationally. PTON is facing mounting challenges as its core subscription business, which accounts for roughly 60–65% of total revenue, continues to weaken. Subscriber counts have already begun falling, with paid connected fitness subscriptions declining to 2.8 million last quarter and trending lower, while alternative data sources show steep downturns in mobile app usage, website traffic, and social engagement.

This combination points to rising churn risk and a potential 100,000 or more subscriber loss in the near term, threatening the company’s recurring revenue base and long-term growth outlook. Hardware sales, another contributor to revenue, remain under pressure, leaving Peloton increasingly reliant on subscriptions at a time when engagement is slipping and brand momentum appears to be fading.

While Peloton has made meaningful progress on cost control, cutting operating expenses by approximately 25% year-over-year in Q2 FY25, expense reductions alone are unlikely to offset the impact of a shrinking subscriber base. Subscription revenue fell around $10 million last quarter to $408 million, and early indicators suggest further declines below $400 million, raising concerns for upcoming quarters. The decline in usage and engagement metrics signals lower member activity and fewer new activations, both of which heighten the risk of sustained subscriber losses.

Ultimately, Peloton’s financial resilience depends heavily on stabilizing its subscription base, but current trends point to continued deterioration. While cost savings provide some relief to the bottom line, they cannot replace growth, leaving the stock’s risk/reward skewed to the downside. Unless subscriber trends reverse or stabilize, Peloton’s long-term trajectory appears challenged, with significant potential for ongoing revenue pressure and brand erosion.

Previously, we covered a bullish thesis on Peloton Interactive, Inc. (PTON) by Open Insights in March 2025, which highlighted strong profitability, improving free cash flow, effective cost restructuring, low churn, and potential subscriber growth supporting upside. PTON’s stock price has depreciated by approximately 16.92% since our coverage due to weakening subscription trends and slowing engagement. TickerTrends shares a contrarian view but emphasizes accelerating subscriber losses and rising churn risk, underscoring that cost savings alone may not sustain long-term growth.

Peloton Interactive, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 62 hedge fund portfolios held PTON at the end of the third quarter which was 53 in the previous quarter. While we acknowledge the potential of PTON as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.