Every time I’ve mentioned Peloton over the last three years, it’s usually gone like this:

1. To describe my wife’s workout bike “it’s kinda like a Peloton, but reasonably priced.”
    
2. Or to crack a joke about a company that went from “pandemic darling” to “NASDAQ yard sale” in record time.

But in a 2020 flashback… Peloton’s stock is up 10%... and shockingly, not because someone mistakenly typed in the wrong ticker (like when “Zoom” Video Communications got confused with some random Chinese company during COVID). It turns out, (checks to make sure this is right) the company actually posted a profit and managed to beat Wall Street’s expectations on both the top and bottom lines. You just know that somewhere, their old CEO is hearing it from his old lady for selling his Hamptons compound (and Range Rover) three years early.

Let’s start with the headline number: instead of just losing a “little less money this quarter”... Peloton actually turned a profit. Yes, real, honest-to-God, net income. In Q4, the company posted $21.6 million in profit, or $0.05 per share, compared to a $30.5 million loss during the same period last year. This is a huge sign their actually might be some hope for all the bagholders (you know who you are).

Revenue also surprised to the upside, hitting $607 million and beating Wall Street’s $580 million estimate. Now, before we break out the red panties (as Conor McGregor once famously said), it’s worth pointing out that revenue is still down 6% year-over-year… so no, this isn’t exactly a growth story yet. But when you’ve been face-down in the dirt for two years, even crawling forward counts as progress. (And if you’re Peloton, "less shrinkage" is about as good a headline as you’ve had in a while.)

The reason behind the numbers isn’t exactly a mystery… this wasn’t some surprise spike in demand or a viral moment from a fitness instructor that got everyone back on their bikes. This was good old-fashioned, brutal cost-cutting. CEO Peter Stern (yes, the same guy who helped build Apple Fitness) is cutting costs like he’s prepping Peloton for a Great Depression.

(Source: CNBC)

In fiscal 2025 alone, the company carved out $200 million in costs. Now they’re gunning for another $100 million in 2026. Half of that will come from renegotiating contracts and choking off vendor spend (sorry to whoever was selling them overpriced foam rollers). The other half? Layoffs… another 6% of staff, gone. It’s harsh, but it’s also why Peloton suddenly has $320 million in free cash flow and something resembling a pulse on its financials. It appears the company is finally climbing out of the financial grave they dug post-pandemic.

And before I forget, I have to hand credit where credit is due… a week before this earnings release, UBS upgraded Peloton to “Buy” with a new price target of $11 (up from $7.50). They said deeper cost cuts and better operational efficiency could drive 2026 EBITDA to $400–$450 million, blowing past Street estimates of $358M. And so far, they look pretty dang spot-on.

UBS also pointed out a surprising uptick in engagement… active users actually increased in May and June (which, for Peloton, is basically like spotting a unicorn on a treadmill). And even with the risk of some subscribers bailing over future price hikes, UBS thinks Peloton could still rake in an extra $90 to $100 million a year from those adjustments alone. Which means, if they play it right, Peloton might finally start leveraging its subscription model the way investors always hoped… by squeezing more juice from the loyal riders who still workout from home.

So are all the Peloton bagholders gonna be able to sell for a profit finally? I wouldn't get your hopes up yet. It’s like bumping into your ex who now has a job, a haircut, and claims they’ve “done the work.” You want to believe them… but you still remember the time they depleted your Roth IRA for Katy Perry concert tickets and called it a learning experience.

To be clear, Peloton’s not out of the woods. Revenue’s still sliding, and next quarter’s forecast came in soft… blame summer, when nobody’s buying workout gear unless it floats. And thanks to a fresh round of aluminum tariffs, they’re bracing for a $65 million hit to free cash flow next year. So that “free delivery” is about to get a lot more... optional.

Still, we have to give him some props. While Stern’s cost cutting bender is leading the charge… he’s also trying to build something new. Smaller stores, used bike resale, international growth, finally doing something with Precor (their 5 year old acquisition)… it’s all in motion. Margins are improving too, with hardware up to 17.3% and subscription margins at nearly 72%.

So don’t get carried away just yet, but this could be the early signs of another pandemic-era rebound… similar to what we’ve seen with Carvana. The numbers aren’t explosive, but there’s a real shift in the right direction.

At the time of publishing this article, Stocks.News holds positions in Apple as mentioned in the article.