Don't Be Fooled by Peloton's "Turnaround"

Core Insights - Peloton's fourth quarter performance exceeded low expectations, breaking a streak of revenue declines and reducing net loss, leading to a stock surge of up to 30% [1] - Despite a slight revenue increase of 0.2% year over year in the fourth quarter, the company anticipates a revenue decline of 4% in the first quarter of fiscal 2025 and 9% for the full fiscal year [2] - The company is prioritizing profitability over growth, which raises concerns about its market capitalization of approximately $1.6 billion given the long timeline for potential revenue growth [2] Revenue Performance - Peloton's revenue for fiscal 2025 is projected to be around $2.45 billion, with declines expected in connected fitness product sales and a decrease in subscriber numbers [2] - The company has not established a clear path for revenue growth, which remains a significant concern for investors [1][2] Subscription Challenges - Peloton's connected fitness subscription is expected to see a 9% decline in subscribers for fiscal 2025, while the app subscription is projected to drop by 3% [3] - The app subscription business is experiencing a high churn rate, with a 26% year-over-year loss in subscribers during the fourth quarter [3] Strategic Outlook - The company aims to enhance subscriber experience to reduce churn, but the timeline for achieving meaningful improvements is uncertain [4] - There is skepticism about Peloton's ability to regain market traction for its high-priced home exercise equipment due to increased competition and the fading pandemic-era demand [5] Leadership and Strategy - Peloton is currently being led by board members following the departure of its former CEO, highlighting a need for new leadership and a revised strategy to drive future growth [1][5]