Can Peloton (PTON) Stock Rebound in 2026?

Peloton Interactive (NASDAQ: PTON) stock has been a huge disappointment for investors over the past few years. But as the company has struggled to regain its footing, the stock just keeps heading lower. It's down 31% over the past year, and it's 96% off its all-time highs. Can investors expect things to change in 2026?

Why Peloton stock has plummeted

Peloton was a market darling when it debuted, right before the pandemic shut gym doors and created an almost insatiable demand for Peloton products. The company switched into high-growth mode to meet demand, building out infrastructure and making changes to its operating model. However, the company was left with all the extra when demand diminished after gyms opened again.

Since then, things have gone from bad to worse in some senses, although the company has made strides in righting its model and meeting current trends.

Image source: Peloton.

The company is moving toward a subscription model, which has higher margins and more demand. It continues to try new devices and product types, including the Peloton Pro Series, which is designed for a commercial environment, and it's opening up new retail locations and wholesale partnerships.

There have been some wins, such as a 5% increase in average workout time per connected fitness subscription in the 2026 fiscal first quarter (ended Sept. 30), and generally accepted accounting principles (GAAP) net income of $14 million in the third quarter.

However, the company continues to report lower sales and decreases in many engagement metrics. In Q3, revenue fell 6% from last year to $551 million, and gross margin dropped 0.3 percentage points to 51.5%. Paid connected fitness subscriptions decreased 6%, and ending paid app subscriptions were down 8%.

Can things change in 2026?

It keeps seeming like things have hit rock bottom for Peloton, but then it goes down further. So it might look as if at this point, the only way to go is up, but that's not necessarily the case.

The positive net income is a great sign of efficiency, but there are only so many costs the company can cut before revenue growth has to take over to keep a positive bottom line.

For the fiscal 2026 full year, management is guiding for a sales decrease of 2%, which means it anticipates some upward movement from Q1. It's guiding for second-quarter sales to be roughly flat, and lately, it has outperformed guidance. It's also guiding for increases in free cash flow, gross margin, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in Q2 and the full year. So, 2026 may be the year when the only way it can go is up.

This is still a risky proposition for investors, and it could end up being a value trap rather than an opportunity to buy on the dip. I would caution most investors to wait and see how things go, even at the expense of getting the stock at its bottom.

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Peloton Interactive. The Motley Fool has a disclosure policy.