Peloton Interactive (PTON) shares dropped 12% to $5.76 on Thursday, putting the stock on pace for its largest single-day decline since February 5, 2026. The sell-off followed the company's fiscal fourth-quarter earnings report, in which Peloton exceeded Wall Street expectations on both earnings and revenue but issued a revenue outlook for fiscal 2027 that fell short of analyst forecasts.

For the quarter ending June 30, adjusted earnings per share came in at $0.13, edging past the $0.12 analyst consensus. Total revenue reached $607.7 million, surpassing the $596.6 million estimate. Net income rose to $61.6 million, up from $21.6 million in the same quarter a year earlier.

Fourth-quarter adjusted EBITDA totaled $142.3 million, slightly higher than the $140 million reported a year prior but below the $150.9 million analysts had anticipated.

PELOTON $PTON Q4'26 EARNINGS HIGHLIGHTS

🔹 Revenue: $607.7M (Est. $598M) 🟢; flat YoY 🔹 EPS: $0.13 (Est. $0.13) 🟡 🔹 Adjusted EBITDA: $142.3M (Est. $151M) 🔴 🔹 Net Income: $61.6M (Est. $62.2M) 🔴; +185% YoY

FY27 Guide: 🔹 Revenue: $2.3B-$2.4B (Est. $2.42B) 🔴 🔹 Gross… pic.twitter.com/yYt9T7samT

— Wall St Engine (@wallstengine) August 6, 2026

Fiscal 2027 Outlook Disappoints

Peloton projected fiscal 2027 revenue in the range of $2.3 billion to $2.4 billion. At the midpoint, that figure represents a 3.9% decline from the prior year and trails analyst estimates of $2.44 billion. If realized, it would mark the sixth consecutive fiscal year of declining sales for the company, which peaked at $4.02 billion in revenue during fiscal 2021, when pandemic-driven demand for at-home fitness propelled rapid growth that has since reversed as consumers returned to gyms and in-person activities.

Adjusted EBITDA for fiscal 2027 is forecast between $475 million and $525 million, reflecting a 6.8% increase at the midpoint. Free cash flow is targeted at a minimum of $350 million.

Subscriber Declines Continue

Paid subscribers fell to 2.55 million during the quarter, an 8.8% year-over-year decrease. The company shed approximately 247,000 paid fitness subscribers over the period.

Peloton expects further attrition. Its first-quarter guidance projects 2.46 million to 2.49 million paid subscribers, which at the midpoint would represent a 9.8% year-over-year decline. Q1 revenue is expected to land between $545 million and $565 million, roughly flat versus the prior-year period at the midpoint.

Gross margins, however, are projected to expand. Full-year gross margins are guided at 54%, an improvement of 140 basis points, while Q1 gross margins are expected at 57%, up 550 basis points. The margin gains reflect Peloton's ongoing cost-reduction efforts, which have included workforce reductions, retail store closures, and a shift toward leaner operations under Stern's leadership.

CEO Points to New Product Launches

Chief Executive Officer Peter Stern expressed confidence on the earnings call, saying that new product launches scheduled before the end of the calendar year would help lift both equipment unit sales and revenue.

"The product introductions in fiscal 2027, combined with the entry into new categories in fiscal 2028 and beyond, provide the foundation for revenue acceleration," Stern said.

Stern has led Peloton's turnaround efforts since taking the helm in October 2024. In October 2025, the company raised prices, revamped its product lineup, and introduced AI-powered updates.

Heading into the earnings report, Peloton shares had rallied 56% from their all-time closing low of $3.71 reached on March 13, reflecting growing investor optimism. Thursday's decline erased a significant portion of those gains.