Peloton rallies as strong holiday forecast boosts turnaround hopes

Shares of fitness equipment maker Peloton climbed after the company issued a stronger-than-expected outlook, signaling progress in its effort to restore growth following a post-pandemic slump. After years of declining sales, the company has overhauled its product lineup, raised prices, and improved profitability. Still, analysts remain cautiously optimistic about the turnaround.

Peloton shares jumped nearly 7.5% at the open today, November 7, after the company issued a stronger-than-anticipated holiday quarter forecast. The stock later pared gains but remained up more than 5%.

The company guides for revenue of $665-685 million for the holiday quarter ending in December, beating Wall Street’s estimate of $661 million, Bloomberg reported. The improved guidance reflects early traction from a revamped product portfolio and price increases across hardware and subscriptions, Reuters noted. The results bolstered investor confidence in the company’s recovery after a prolonged downturn.

The company maintained its full-year fiscal 2026 revenue guidance at $2.4-2.5 billion. Paid subscriptions on its devices are expected to decline about 8% year over year in the current quarter, after a 6% drop in the previous period. Total members fell 6% year over year to 5.9 million.

Free cash flow increased $57 million to $67 million in the quarter, reflecting stronger cost control and lower inventory levels.

"We are encouraged by Peloton's progress across improving profit, ramping free cash flow, and deleveraging," JPMorgan analysts said. "But it remains to be seen whether product and marketing initiatives are significant enough to drive durable revenue growth."

Wall Street’s view of the stock remains cautiously upbeat. Ten analysts rate Peloton shares a “buy,” while another 10 recommend holding. Only one analyst has a “sell” rating, according to MarketWatch data.

Alongside its earnings report yesterday, Peloton announced a recall of about 833,000 original Bike+ machines from its early product line. The U.S. Consumer Product Safety Commission said a component could break and detach during use – the same issue that led to a recall of the base Bike model in 2023, CNBC reported. The recall cost the company $13.5 million in the quarter and reduced its gross margin by 0.3 percentage points, Bloomberg noted.

Last month, as part of its strategy to emerge from years of decline, Peloton unveiled its first major product refresh in years under the new management. The company also launched Peloton IQ, an AI platform that provides personalized recommendations, analytics, and workout plans. The management hopes the AI-driven features will increase users’ workout frequency and time spent on the platform.

In October, Peloton also raised prices across its portfolio, increasing hardware costs by an average of 11% and subscription fees by about 19%, while in August it eliminated roughly 6% of its workforce, Bloomberg recalls.

The AI translation of this story was reviewed by a human editor.