Peloton Interactive Stock Skyrockets: Here’s the Fuel Behind the Rally

Peloton shares just ripped through resistance like a HIIT session—here's why traders are chasing the pump.

The catalyst? Rumors of a crypto pivot.

Whispers hit the tape about Peloton exploring blockchain-based fitness rewards—think 'move-to-earn' tokens for crushing spin classes. Market loves nothing more than a Web3 fairy tale.

Short squeeze adding rocket fuel

25% of float was short before the pop. Cue the inevitable scramble to cover when the narrative flipped bullish. Classic Wall Street—first they mock, then they FOMO.

Warning lights flashing

Let's not pretend this isn't the same company that burned $2B last year. But hey, in today's market, 'potential' beats profits every time. Just ask any crypto degen.

Image source: Getty Images.

Why UBS loves Peloton

UBS sees Peloton making progress cutting costs and growing revenue, resulting in higher expectations for fiscal 2026 profits. Granted, that might not happen, but UBS sees the stock as offering a "favorable risk/reward [ratio] and undemanding valuation" at its present price -- and cash FLOW is already improving.

All of this leads the analyst to predict that Peloton might guide investors to higher 2026 profit than Wall Street is expecting. Kocharyan's best guess is that Peloton might guide to $400 million or even $450 million in 2026 earnings before interest, taxes, depreciation, and amortization (EBITDA) -- as much as a 25% earnings surprise.

Is Peloton stock a buy?

Now mind you, we're talking about EBITDA here, a rather spongy term and not actual net profit, much less real free cash Flow (FCF) that goes into the bank.

Still, Peloton has resumed generating positive free cash flow, and most analysts agree Peloton will remain FCF-positive this year and, indeed, for the foreseeable future. Valued on the $245 million in cash profit the company will probably generate this year, the stock only costs about 11.5 times current year FCF, which I agree is an "undemanding valuation," so long as Peloton can grow as UBS predicts.

Even with $1.1 billion in net debt on the books, the price looks right for this one. I agree: Peloton stock is probably a buy.