Peloton Introduces Exercise Bikes and Treadmills. Is That Enough To Save PTON Stock?
Peloton (PTON) has been struggling since 2021, waning from its superstar status, but the company is trying to make a comeback by reinventing itself. Peloton now sees itself not only in living rooms, but also in the gym.
The company recently introduced the Peloton Commercial Series, its first line of bikes and treadmills designed specifically for high-traffic gyms. Equipment includes Peloton’s popular digital platform and Precor commercial engineering instructor-led classes. Shipping will begin in late 2026, with availability across the US and Canada, the United Kingdom, Australia, Germany and Austria.
For most of Peloton’s life as a public company, the business model has focused on selling expensive bikes to eager home users, then charging them a monthly subscription. Of course, that worked during the violence, but things quickly deteriorated as people returned to public spaces like gyms.
Now, Peloton is chasing those people in the gym.
Peloton has spent the better part of a decade publishing blog posts with titles like “Peloton or the Gym?” and answering that question with certainty about the gym being out of date. The company builds a whole identity with the proposition that a spin studio in your living room is not just a convenience but a lifestyle improvement.
However, when Peloton bought Precor for $420 million in December 2020, the opportunity for commercial exercise was there in the press release. Precor President Rob Barker became General Manager of Peloton Commercial almost immediately. At that time, Forbes noted that Precor will provide the company with what Barker described as “the largest commercial network in the fitness industry,” extending Peloton’s experience to gyms, corporate campuses, and universities. But somehow, a commercial bike and treadmill built into the gym didn’t happen until this year.
Gym staff are ruthless cost managers. Therefore, Peloton probably won’t sell them a “premium” fitness product and then charge an expensive subscription like they’ve tried with individual customers. Margins will be much lower.
Many gyms also already have existing relationships with well-established fitness brands that they are willing to sell gear to at a lower price. Whether or not Peloton will lower its prices and accept lower margins remains to be seen, but I believe margins will decrease if the company makes this pivot successfully.
Peloton’s current gross margin of 50.5% is a product of its subscription business model, and that flywheel has long been the envy of the hardware industry. Commercial gym contracts don’t work that way. Gyms pay for equipment upfront, may negotiate content licensing separately, and are less likely to absorb the kind of per-unit pricing that keeps consumer margins fat.
Peloton’s commercial boom appears to be a risky step in the right direction – but it may take six more years to fully bear fruit.
I expect Peloton’s protracted recovery. The company has expanded its addressable market at the expense of what may be very low margins. Peloton’s EBITDA margin is 6.31% and could reach 10% if its gym units become popular. That said, I don’t expect breakneck growth, as gyms won’t be clamoring to buy from a company unless the prices are competitive.
Analysts have a clear price target of $8.19 on PTON stock, but most of the estimates behind this target come before Peloton shares dive.
For now, investors may want to look away, as this is a company with almost $2 billion in debt (total debt is closer to $800 million). That’s a lot compared to the market cap of $1.63 billion.
Peloton’s cash reserves have risen to nearly $1.2 billion as of the fourth quarter of 2025. The business generates about $60 million to $100 million in free cash flow each quarter, but shareholder dilution remains.
PTON shares trade at about 5 times free cash flow, which makes sense when you factor in total debt. Therefore, I would not buy PTON stock immediately, as I still believe it is overvalued and could trade sideways for a while before recovering.
At the date of publication, Omor Ibne Ehsan had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com
