The lowest price of shares of Peloton Interactive Inc. NASDAQ: PTON they’ve been trying to bounce back from a 52-week low in mid-March.
The stock has risen more than 40 percent since then, as the market appears to have begun to buy into the idea that the company’s long-term turnaround effort may finally be gaining traction.
Peloton’s latest earnings report added to that optimism, with shares rallying after the company reported third-quarter 2026 financial results on May 7. However, the stock has since given back most of those gains, leaving some investors wondering if it’s time to get back on the bike.
Peloton Delivers Incentive Benefits
Peloton’s Q3 results for fiscal year 2026 (FY2026) provided some encouraging signs for investors. The company reported revenue of $631 million, up 1% year over year and beating Wall Street expectations by about $13 million. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at $126 million, up 41% from last year, while total debt fell 70% year over year.
The company returned to profitability, reporting revenue of $26 million. Earnings per share of 6 cents improved from a loss of 12 cents in the year-ago quarter, although the results came in a cent below expectations. Gross margin rose 90 points year over year to 52%, but came in below the company’s guidance due to promotions of its connected fitness equipment.
Spotify’s Commercial Business and Partnerships Offer Growth Opportunities
The commercial business unit performed strongly in the quarter, with revenue up 14% year over year. The company is looking to build on that momentum with the release of new commercial products, including a bicycle and treadmill, expected in the second quarter.
On the company’s earnings call, Chief Executive Peter Stern spoke about this opportunity in the commercial space, saying, “We’re seeing tremendous growth in this segment as we estimate that we only have a 3% share of the more than $10 billion and growing fitness equipment market globally.”
Peloton also announced a partnership with Spotify Technology NYSE: SPOTwhich will bring more than 1,400 classes to Spotify Premium users around the world.
Guidance Gives a Mixed Picture
Peloton updated its 2026 outlook as well, increasing the midpoint of its 2026 revenue guidance to $2.42 billion to $2.44 billion, and increased its free cash flow to approximately $350 million, up $75 million from its lower target.
On the other hand, the company lowered its net loan exposure by 50 basis points from the previous guidance to 52.5%. The adjusted EBITDA outlook remained in line with previous guidance at $470 million to $480 million. The company said it expects to end paid subscriptions down 8.6% year-over-year in the mid-point to a range of 2.55 million to 2.57 million.
Wall Street Remains Cautiously Optimistic
Investors initially cheered the report, with shares rising more than 16% at one point during the session before closing up about 9% for the day. In subsequent sessions, however, optimism seemed to fade as shares fell in three of the next five trading days, returning nearly 11%. Currently, shares are trading at roughly where the stock closed prior to the earnings report.
Price chart of Peloton Interactive, Inc. (PTON) for Saturday, May, 16, 2026
After the release of earnings, Goldman Sachs Group, Inc. raised its price target on Peloton to $8 from $7, while Weiss Ratings modestly upgraded the stock from Sell (D) to Sell (E+), suggesting some improvement in the company’s outlook although the company maintained a bearish stance on the stock.
The current consensus rating on the stock is Hold, with eight Hold ratings, five Buy ratings, and one Sell rating.
On average, Wall Street still sees a reasonable upside for the stock over the next 12 months. The average price target of $8.25 is about 55% above the current share price.
Based on price targets issued or revised over the past year, analyst targets range from $5 to $12, although most targets suggest upside from current levels.
Short Interest Has Improved, But Skepticism Remains
Short interest in Peloton shares has declined over the past few months, suggesting that at least some investors may be slightly bearish on the stock.
The total number of shares sold short fell from about 67 million shares in mid-February to about 54.5 million shares at the end of April. The percentage of short-sold float decreased from 16% to 13% during that period.
Peloton is still working through several challenges, including declining enrollment and margin pressure. However, the company’s latest earnings report suggested that its turnaround efforts may be gaining momentum, as growth in the trading business, improved profitability, and strong free cash flow guidance provide encouraging signs.
Still, the stock’s inability to hold on to its post-earnings gains suggests that investors may be waiting for consistent signs that could translate into sustainable long-term growth.
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