PTON Should I Buy
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Peloton Interactive Inc (PTON) is not a good buy for a beginner, long-term investor at this time. The stock is facing significant financial challenges, declining revenue, and a shrinking user base. Analysts have downgraded the stock and lowered price targets, while insider and hedge fund selling further indicate negative sentiment. Despite some operational improvements, the lack of growth catalysts and bearish technical indicators make it unsuitable for investment under the given scenario.
The technical indicators for PTON are bearish. The MACD histogram is negative and contracting, indicating a downtrend. The RSI is at 19.885, signaling the stock is oversold, but this does not guarantee a reversal. Moving averages are bearish (SMA_200 > SMA_20 > SMA_5), and the stock is trading near its support level of 4.278, with resistance at 5.718. Overall, the technical outlook suggests continued weakness.
Investor David Einhorn recently purchased PTON shares, citing belief in recovery due to new management and an improving balance sheet. The company has achieved $200 million in annual cost savings and reported a free cash flow of $71 million in Q2 fiscal 2026.
The stock has declined 97% from its peak. Revenue and user base are shrinking, with a 3% YoY revenue decline and a 7% drop in paid fitness subscriptions. Hedge funds and insiders are aggressively selling, with insider selling up 2953.02% in the last month. Analysts have downgraded the stock and lowered price targets, citing fierce competition, declining hardware sales, and delayed revenue growth.
In Q2 fiscal 2026, revenue dropped 2.58% YoY to $656.5 million, net income fell 57.83% YoY to -$38.8 million, and EPS declined 62.50% YoY to -$0.09. However, gross margin improved to 50.46%, up 6.84% YoY, indicating better cost management but insufficient to offset revenue declines.
Analysts have a largely neutral to bearish stance on PTON. Multiple firms, including Citi, JPMorgan, and Morgan Stanley, have lowered price targets significantly, with most ratings at Neutral or Hold. Analysts highlight operational improvements but express concerns over declining user engagement, hardware sales, and delayed revenue growth recovery.
