Peloton Stock Slides Pre-Market Despite Q3 Earnings Beat After Sales Fall For Third Straight Quarter, Warns Of $5M Tariff Impact

Peloton Interactive (PTON) shares fell nearly 5% in pre-market trade on Thursday after the company reported a 13% decline in fiscal third-quarter revenue, its third consecutive year-on-year drop.

Revenue came in at $624 million for the quarter ended March 31, slightly ahead of Wall Street’s estimate of $619 million, according to Koyfin. Peloton posted earnings of $0.12 per share, compared with expectations for a $0.06 loss, helped by continued cost cuts.

Despite the profit beat, the company continues to grapple with declining demand for both its connected fitness equipment and subscription services. Hardware sales dropped 27% in the quarter, while subscription revenue fell 4% year-on-year (YoY).

CEO Peter Stern, who took the helm in January, is attempting to reverse the company’s multi-year slump. Peloton benefited from a surge in demand during pandemic lockdowns but has since struggled to maintain momentum. Revenue is now heavily concentrated in North America, where consumers are cutting back on discretionary spending amid trade-driven economic uncertainty.

Peloton reaffirmed full-year revenue guidance of $2.46 billion to $2.47 billion, with adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) expected between $330 million and $350 million. The midpoint of both ranges marks an improvement from earlier projections.

The company cut operating expenses by 23% during the quarter, largely through reductions in marketing and sales.

Peloton also flagged trade policy risks, noting that a 25% tariff on aluminum components used in its hardware and higher tariffs on apparel imported from China will result in a $5 million drag on free cash flow in the fiscal fourth quarter (Q4).

Stern, a veteran of Apple and Ford known for his focus on subscriptions, said the company will soon outline its fiscal 2026 strategy.

Peloton’s stock has fallen 20% year-to-date but has gained nearly 70% over the past 12 months. 

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