Peloton(US:PTON) The Motley Fool·2026-01-25 09:21Core Viewpoint - Peloton Interactive, once a market favorite, has seen its stock plummet 97% from its all-time high, prompting a reconsideration of its investment potential due to its current low valuation [1][4]. Financial Performance - Peloton's operations burned a total of $2.7 billion from fiscal 2021 to fiscal 2024, averaging nearly $700 million annually, leading to layoffs and management changes [2]. - In fiscal 2025, Peloton generated free cash flow of $324 million, with $67 million in free cash flow for the first quarter of fiscal 2026, indicating a margin of 12% [3]. Valuation - The stock is currently trading at 6 times its trailing free cash flow, which is considered very low compared to industry standards [4]. Profitability and Growth - Peloton has returned to profitability, which is a positive sign for potential investors [6]. - The company needs to achieve growth to create shareholder value, as stagnant businesses typically fail to provide returns [7]. Revenue Trends - Peloton's revenue has been declining for about four years, with a slight expected increase of less than 1% in the upcoming fiscal second quarter, contrasting with a 6% drop in Q1 [9]. Strategic Initiatives - Peloton is expanding through small-format stores within larger retail spaces, which may enhance product visibility and consumer access [10]. - Concerns exist regarding the new commercial product line, as excess inventory without demand could lead to financial strain [11]. Investment Outlook - The path to profitable growth for Peloton is complex, with historical revenue declines raising caution about immediate investment [12].