2 Reasons I Haven't Bought Peloton Interactive, and Don't Plan on Doing So...Ever

By James Brumley – Mar 23, 2026 at 8:05PM ESTKey PointsThere’s a reason Peloton shares continue to sink to record lows despite the company’s recent strategic maneuvering.A superior product doesn’t inherently mean sustained, superior corporate results.Investors should always think critically about the true competitiveness of a new product, or a new take on an old business.There's no denying Peloton Interactive (PTON +2.34%) is the premier, premium name in interactive fitness. It practically pioneered the industry, in fact, when it introduced its very first connected exercise equipment back in 2012. It's also arguably kept the business' bar high ever since, growing itself into the $1.6 billion outfit it is today that did $2.5 billion worth of business last fiscal year. It even swung back to a profit in the final quarter of that year (ending in June). Nevertheless, I still have a couple of major philosophical problems with this company's business, neither of which is its continued struggle to remain out of the red and in the black. Image source: Getty Images. 2 inescapable problems Don't misunderstand. Peloton Interactive may well become and remain fiscally viable one day, rewarding patient shareholders as a result. From a risk-versus-reward perspective, however, I still believe there's too much of the former and not enough the latter. But first things first. ExpandNASDAQ: PTONPeloton InteractiveToday's Change(2.34%) $0.09Current Price$3.93Key Data PointsMarket Cap$1.6BDay's Range$3.82 - $4.0052wk Range$3.65 - $9.20Volume10MAvg Vol12MGross Margin50.14% Peloton Interactive's business model is two-pronged. It obviously makes exercise bikes, treadmills, and rowing machines. It also sells access to online, instructor-led classes, which is the bigger and higher-margin breadwinner of its two ventures, accounting for over 90% of last year's gross profit. Of course, the physical and digital products work hand in hand. From that perspective, it's actually a pretty brilliant business model, not unlike the one that Apple created around its premium-priced iPhone. This model's got two glaring flaws, however. The first of these is a lack of a moat defending its place in the market. Sure, the name "Peloton" is trademarked, and some elements of its equipment and apps are copyrighted and/or patented. The premise of its entire business is easy to replicate though and it has been. Nautilus, iFIT, Echelon, and Technogym each offer some sort of interactive fitness equipment that would be a perfectly acceptable -- and more affordable -- alternative to Peloton-made options. The other stumbling block is the nature of the fitness industry itself. At best, it's highly cyclical. At worst, it's just not all that sticky, meaning consumers aren't interested in remaining paying subscribers to a service they're very likely to stop using. And all of Peloton's key metrics have confirmed these challenges. Late 2022's pandemic-prompted membership peak of 7 million people has steadily dwindled to last quarter's 5.8 million, corresponding with comparable declines in total connected fitness subscriptions, app subscriptions, and most notably, total revenue. Last fiscal year's top line of $2.5 billion extends a pullback from fiscal 2021's peak of just over $4.0 billion. Analysts are calling for another slight sales decline for the fiscal year ending in June. A turnaround-inducing fix is unlikely It's understandably frustrating to shareholders who have and still do expect big things from this company. Like the aforementioned Apple, Peloton Interactive makes the best overall product in the business. The problem is simply the business itself -- neither consumers nor gyms need or want to pay a premium price for this company's offerings when a lower-cost alternative will suffice. And that's a problem for investors because there are plenty lower-cost alternatives available. Never say never. But, it seems unlikely there's ever going to be a game-changing solution to put in place here. Shareholders best bet from this point is that a bigger technology outfit will acquire Peloton, mostly for its brand name. Even that seems like bit of a long shot though, given how crowded the fitness equipment market is.Read NextMar 17, 2026 •By Danny Vena, CPAWhy Peloton Stock Skyrocketed Tuesday MorningMar 14, 2026 •By Neil PatelIs the Sell-Off in Peloton Overblown?Mar 5, 2026 •By Neil Patel1 Reason I Haven't Bought Peloton -- and Probably Never WillMar 3, 2026 •By Eric VolkmanWhy Peloton Stock Plummeted by Over 28% Last MonthFeb 25, 2026 •By Neil PatelWhat to Know Before Buying Peloton Stock in 2026Feb 21, 2026 •By Neil PatelWall Street Erases $47 Billion From This Once Unstoppable CompanyAbout the AuthorJames Brumley is a contributing Motley Fool stock market analyst covering consumer staples and consumer discretionary stocks. James is a former licensed stockbroker with Charles Schwab, and a registered investment adviser. He holds a bachelor’s degree in business management with a specialization in finance from Transylvania University.TMFjbrumleyX@jbrumleyStocks MentionedPeloton InteractiveNASDAQ: PTON$3.93(+2.34%)+$0.09AppleNASDAQ: AAPL$251.44(+1.39%)+$3.45*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.