Peloton’s turnaround is finally working. The tide has gone out and we’re seeing who isn’t wearing any shorts.

Note: As always, none of what follows is legal, tax, investing, financial, or any other sort of advice. And I was never here 😉.

Peloton The luxury bike that imploded when it thought it could outgrow the COVID boom has finally shrunk its way into Profits.

Now lost, barely profiting off of bike sales, it's time to turn this ship around properly.

Source: Peloton FY2026 10-K, filed Aug 6, 2026, SEC EDGAR

This is 2 different business trapped in Bowflex cosplaying as Apple and there’s a reason the stock hasn’t moved despite their massive swing from -$180m in Net Loss -> $63m Profit.

Because even with the turnaround the Hardware biz is still a dumpsterfire. And not trending in the right direction.

I’ve been very outspoken about my bearish view on Hubspot. I think they’ve wasted the golden opportunity to be an AI platform, which has left a semi-truck sized hole for someone to AI-replace them.

In April after I gave up on Hubspot we moved to Day.AI (Shoutout to Sarah Nesheim for the original recommendation) and will never look back. 

What’s really the difference?

When a tool is built around AI, vs. AI is slapped on, what you can do is completely different.

The quick TL;DR on an AI CRM so you understand:

You’re not stringing together 11 tools to get basic fields updated.

When that’s properly built from scratch you can sell more because anyone on the team talks to agents to update their processes.

A weekly Claude job reviews our pipeline and sales process. In the report of all our Reps agents, processes, workflows. I give my feedback on its recommendations in Claude and push the updates to the agents in Day AI.

What I’m adding now: proactively drafts emails to Closed Lost deals.

At this point this whole process takes me 1-2 hours/week. We focus on selling and helping out customers. Not updating the CRM.

It’s been an absolute game changer for Coco AI that at previous companies I needed to have a team of GTM Engineers/RevOps to manage.

Check it out on your data at Day.ai

Founded: 

Aha Moment: 

Growth:

Model: 

Where We Are Now: 

Here are the 3 plays we’re finally unburdening this biz and making it a win.

The Connected Fitness products (Bikes, Treadmills, Rowing machines) have 11% Gross Margins. 11% GROSS margins. This is one of the worst consumer device bizs off all time.

At least it beats their negative gross margins they used to print. That’s the most tarnished silver lining I’ve ever come up.

By comparison the Software biz is 66% of total Rev at $1.6B in 2025 Rev at 71% Gross margins.

The money Peloton is torching building devices they struggle to sell would be better invested in making the BEST workout app in the market.

And if you think it’s the front end of this biz I call horse hockey. Bike and Subscription sales have consistently plummeted for 3 years. AKA people are buying/keeping their bikes and cancelling their subscriptions.

There’s only 1 way to save this biz.

Sell/license/whatever they can do to stop manufacturing physical products.

Someone has to product these products for better than 11% Gross Margins.

Freeing this software biz would radically increase the stock price. Spotify/Netflix trade at 4-6x Rev. Even if we take the low end Peloton Software is worth $3-4B.

That one move doubles the stock price. Before we actually improve that biz.

Takeaway: If you can’t print 50%+ Gross Margins. Run.

Peloton has completely lost the script. Rich customers were willing to drop $2k on a stationary bike, because Peloton brought the Exclusive NYC/LA $200 spin class into your home gym.

Today they have their instructors present to empty rooms. 

At $28.99/mo. this is comical. The instructor is still motivational. It’s cool to see the stats on the screen, but good gracious. This is no longer the incredible exclusive gym experience at home.

Also look at this selection. Meditation, Stretching, Outdoor. WHAT are they doing?

Cut the sprawl. Meditation, outdoor audio, walking content, all the categories that turned the app into a junk drawer. 

Refocus on the flagship instructor content in live classes. Bring back the leaderboards. PelotonIQ can still personalize a workout, but drop people in cohorts, bring back competition and make people feel part of a community.

Let all the none Connected device subs input their stats from their other equipment and give people a reason to care again.

This will reverse the churn trend and reignite growth again.

Takeaway: Listening to feedback vs. knowing why customers buy aren’t the same thing.

As GLP-1 customers care more about maintaining their muscle mass Peloton has an easy opportunity to tie their dingy to the biblical economic storm that will be the GLP-economy.

Create specific content with specific instructors tailored to GLP-1 users. What are the workout they need to prioritize, content they need to consumer to keep the fat off, muscle on and live their best new life.

This market is so massive and expanding that they can easily grab significant shares by just being helpful and early.

It will also give them their first foray into creating problem based content categories. People do look for workout content based on activity (Running, Biking, Rowing), but more importantly they want solutions to their fitness problems.

GLP-1 can be their first collection to expand to: Beach Body, Adding Muscle, Losing weight etc. Getting wedding fit.

This is either their death knell or their opportunity of a lifetime.

Takeaway: Either Ride the GLP wave or get obliterated by it.

I’ve been beating up on Peloton every year I’ve written this newsletter because it was obvious when the stock lost 90% of its value in < 6 mos (I was one of those investors) what the biz needed to do.

Either through hubris, delusion or earnest belief that somehow the market would rebound they stubbornly decided to continue building this biz.

The only way they were going to continue to exponentially grow out of COVID was if you slapped an Apple logo on the bikes. 

I don’t know why Apple would have seriously acquired them, but that was the only way Peloton was going to become a legitimate Fitness hardware manufacturer.

It’s incredibly frustrating to watch a biz continue down the obviously wrong path (For Peloton that’s making Bikes that can’t print 25%+ Gross Margins) for so long.

The fact that this biz is shrinking so aggressively and trading at 34x their Net Income is insane.

They won’t be around in 34 years to pay that cashflow back unless they can find a way to get more profitable and get back to growth.