Peloton Interactive Inc (NASDAQ: PTON) has secured financing and cut costs over the past year or so to dilute concerns of bankruptcy, but its stock remains far from worth owning in 2025.
While PTON remains in loss on a GAAP basis, the aforementioned efforts helped the connected fitness company generate $70.3 million in adjusted EBITDA in its fiscal 2025.
At the time of writing, Peloton stock is down about 40% versus its year-to-date high.
Why Peloton stock remains unattractive to own
While the exercise equipment company no longer faces an imminent risk of bankruptcy, Peloton shares’ long-term investment appeal remains weak.
PTON now needs sustainable means of sales growth to trigger a meaningful recovery in its stock price, since the management may soon run out of costs to cut.
This could again lead to distress on the bottom line if sales don’t rebound – signs of which have not been evident in the company’s recent quarterly reports.
Revenue continues to shrink at Peloton with no clear end in sight.
Additionally, the Nasdaq-listed firm still has just under $1.0 billion in long-term net debt that limits its ability to invest in growth initiatives.
In short, PTON stock remains a high-risk investment for the back half of 2025 because any misstep could reignite losses and put pressure back on the company’s balance sheet.
CFO Elizabeth Coddington recently sold PTON shares
Peloton stock is even more unattractive to own following news that Elizabeth F. Coddington, its chief of finance, has recently trimmed her exposure to the connected fitness company.
On June 16th, Coddington sold a little under 39,000 PTON shares for about $269,000 in total.
While the company’s chief financial officer still owns nearly 300,000 shares of Peloton, an 11.62% decrease in her stake this week, nonetheless, reflects waning confidence in the company’s future.
Peloton stock may currently be trading at a fraction of its peak price during the COVID pandemic, but it’s not necessarily a cheap stock to own.
With no clear growth catalyst and a real risk of future financial strain, investors may be better off sitting on the sidelines for now on this one.
Wall Street remains bullish on Peloton Interactive Inc
Despite ongoing challenges, analysts seem to be fixating more on cost cuts and adjusted EBITDA that Peloton Interactive has been able to achieve so far.
This is evidenced in Wall Street’s consensus rating on PTON that remains at “overweight” with an average price target of a tad below $9.0, which indicates potential upside of more than 40% from current levels.
In fact, the Street-high target on Peloton stock currently sits at a whopping $20, signalling potential for a more than 200% rally from here. That said, the exercise equipment company doesn’t pay a dividend at writing.
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