Peloton (PTON) has been struggling since 2021, fading from its pandemic-star status, but the firm is trying to make a comeback by reinventing itself. Peloton now sees itself not just in living rooms, but on the gym floor.
The company recently unveiled the Peloton Commercial Series, its first line of bikes and treadmills designed specifically for high-traffic gym environments. The machines fuse Peloton’s celebrated digital platform and instructor-led classes with Precor’s heavy-duty commercial engineering. Shipping will begin in late 2026, with availability across the U.S. and Canada, the United Kingdom, Australia, Germany and Austria.
For most of Peloton’s life as a public company, the business model has revolved around selling expensive bikes to aspirational home users, then charging them a monthly subscription. Of course, that worked during the pandemic, but things quickly fell apart as people returned to public spaces like gyms.
Now, Peloton is chasing those people to the gym.
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Peloton spent the better part of a decade publishing blog posts with titles like “Peloton or the Gym?” and answering that question with conviction about the gym being obsolete. The company built its entire identity around the proposition that a spin studio in your living room is not just a convenience but a lifestyle upgrade.
And yet, when Peloton bought Precor for $420 million in December 2020, the commercial gym opportunity was right there in the press release. Precor President Rob Barker became General Manager of Peloton Commercial almost immediately. At the time, Forbes noted that Precor would hand the company what Barker described as “the fitness industry’s largest commercial network,” extending the Peloton experience to gyms, corporate campuses, and universities. But somehow, a commercial bike and treadmill built for gym floors did not materialize until this year.
Gym operators are ruthless cost managers. So, Peloton likely won’t be selling them a “premium” fitness product and then charging an expensive subscription as it tried with individual customers. The margins will be substantially lower.
Most gyms also already have some form of an existing relationship with well-established fitness brands that are willing to sell them the gear for cheap. Whether or not Peloton is going to lower its prices and accept lower margins is yet to be seen, but I do believe margins will go down if the company is to make this pivot successfully.
Peloton’s current 50.5% gross margin is the product of a subscription business model, and that flywheel has been the envy of the hardware industry. Commercial gym contracts do not work that way. Gyms pay for equipment upfront, may negotiate content licensing separately, and are unlikely to absorb the kind of per-unit pricing that keeps consumer margins fat.
Peloton’s commercial foray appears to be risky move that is a step in the right direction — but it may take six more years to fully bear fruit.
I expect a drawn-out recovery for Peloton. The company has broadened its addressable market at the cost of what will likely be much lower margins. Peloton’s EBITDA margin is at 6.31% and could reach 10% if its gym units become popular. That said, I do not expect breakneck growth, as gyms won’t be clamoring to buy from the company unless it prices competitively.
Analysts have a mean price target of $8.19 for PTON stock, but many of the ratings behind this target come from before Peloton shares took a dive.
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In the meantime, investors may want to watch from a distance, since this is a company with almost $2 billion in debt (net debt is closer to $800 million). That’s quite a lot compared to the $1.63 billion market capitalization.
Peloton’s cash reserves have increased to nearly $1.2 billion as of the fourth quarter of 2025. The business is generating roughly $60 million to $100 million in free cash flow per quarter, but shareholder dilution remains.
PTON stock trades at around 5 times free cash flow, which makes sense when you factor in the net debt. Accordingly, I wouldn’t buy PTON stock immediately, as I still believe it’s fairly valued and could trade sideways for a while before recovering.
On the date of publication, Omor Ibne Ehsan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
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