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

Core Thesis - Peloton Interactive, Inc. is facing significant challenges as its core subscription business, which constitutes approximately 60-65% of total revenue, is weakening, leading to a bearish outlook on the company's future performance [2][5]. Subscription Business - The number of paid connected fitness subscriptions has declined to 2.8 million, with indications of further decreases, raising concerns about subscriber churn and potential losses exceeding 100,000 in the near term [2][3]. - Subscription revenue fell by around $10 million to $408 million last quarter, with early indicators suggesting it may drop below $400 million in upcoming quarters [4]. Engagement Metrics - Alternative data sources indicate a steep decline in mobile app usage, website traffic, and social engagement, which correlates with lower member activity and fewer new activations [2][4]. Financial Performance - Operating expenses have been reduced by approximately 25% year-over-year in Q2 FY25, but these cost savings are unlikely to compensate for the declining subscriber base [4]. - The stock's risk/reward profile is skewed to the downside, as financial resilience is heavily dependent on stabilizing the subscription base, which is currently deteriorating [5][6]. Market Context - Since a previous bullish thesis in March 2025, Peloton's stock price has depreciated by approximately 16.92% due to weakening subscription trends and slowing engagement [6].