Can Peloton Stock Double by 2030?

Core Viewpoint - Peloton Interactive is showing signs of financial improvement, which is reducing risk and moving the company closer to a sustainable business model, previously questioned in recent years [1] Financial Performance - For the fiscal 2025 second quarter ending December 31, 2024, Peloton reduced its net loss to $92 million from$195 million year-over-year, despite a 9% decline in overall revenue [3] - The company cut operating expenses by 25% in the second quarter, particularly in sales and marketing, contributing to lower net losses [4] - As of December 31, 2024, Peloton's net debt was $670 million, a 30$35 million, over 10% of gross profit [5] Growth Challenges - Peloton's second-quarter sales of $674 million were 47% below the peak in Q3 of fiscal 2021, indicating significant challenges in returning to growth [7] - The company is facing declining connected fitness subscribers, highlighting difficulties in encouraging consumer spending on exercise equipment [9] - Wall Street analysts project an 8% revenue decline between fiscal 2024 and fiscal 2027, reflecting a lack of optimism regarding growth [10] Valuation and Future Potential - Peloton's stock trades at a price-to-sales ratio of 1.4, which is 67% below its historical average, suggesting potential upside if financial improvements continue [11] - For the stock to double by 2030, revenue would need to grow by 50%, assuming a P/S multiple expansion to 2.1, which is contingent on achieving profitability [12] - Current struggles in hardware sales and subscriber growth raise doubts about the feasibility of this favorable outcome [13]