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Planet Fitness: We Missed The Boat, Now What?

May 06, 2020 9:54 AM ETPlanet Fitness, Inc. (PLNT)20 Comments


  • PLNT is a stock we took massive profits in back in 2018, and have been just trading it here and there ever since.
  • We failed to pull the trigger on the name in March and missed a double.
  • Now, here we are just under $60 a share, and we think the stock is ahead of itself because we question whether growth will return even when things open up.
  • Looks like more of a short target then a long target.
  • Looking for a helping hand in the market? Members of BAD BEAT Investing get exclusive ideas and guidance to navigate any climate. Get started today »

Prepared by Stephanie, Analyst at BAD BEAT Investing

Planet Fitness (NYSE:NYSE:PLNT) is a stock we took massive profits in back in 2018, and have been just trading it here and there ever since. We had a another trade on in H2 2019 that worked out. As the stock had pulled back (actually, it fell off a cliff) as the market sold off due to COVID-19, the stock caught our eye. However, this was one play where we failed to pull the trigger on, because much like cruise ships, movie theaters, sit down only restaurants, and sport venues, we had concerns over businesses that require people to pack into tight spaces together. With gyms, you factor in the sweat and multiple surfaces touched. We felt it was best to avoid the stock and advised our members at BAD BEAT in our chat service that it would rebound but we did not think a double was in the cards. We didn't play it, regrettably. The stock rallied, but it was moreso the market rally overall that pushed the stock back up in many cases.

In retrospect, it seems it was a sum of the parts opportunity. Now, here we are just under $60 a share, and we think the stock is ahead of itself. Make no mistake, we love the company, we love the business model, but we still think it was the right decision fundamentally. We are now seeing gyms going bankrupt. First it was 24 Hour Fitness, and just today, it was Gold's Gym. Some may argue if these gyms go belly up it is good for Planet Fitness. We would be inclined to agree, but bankruptcy does not mean the gyms close, so no competitive advantage is necessarily had. However, Planet Fitness is feeling the pinch too. After the

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Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a short position in PLNT over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (20)

Aran Ali profile picture
the narrative behind this stock is akin to many others consumer discretionary growth types, growth is deteriorating and expected to really reflect in the Q2, Q3, and other quarters thereafter (depending on how long this plays out for) and yet the stocks are rallying. And like the other stocks, its tough to say if the rally will continue, or if its expected to fall back down like the earnings suggest it should.
Go and do likewise profile picture
6% pop in the opening hour. I'll be interested to see if that sticks.
rex.ter profile picture
more like missed the bullet
I think the stock will be good at $40.gyms will reopen within month or two.if you wait till the open you miss the profit.question is, where is the bottom?
Just got the
ok to reopen here in Arizona
I agree! I owned PLNT until last year. It may take a while before confidence is restored. Hopefully, will jump in if vaccine is developed. Thanks for the article.
Unlikely to go bankrupt, but unlikely to grow in this environment either. Plod along earnings of $100mm at slow growth 15 PE=$1.5B=$20/share. To bad, it was a good story, but can't ignore new reality.
Go and do likewise profile picture
Nice article. I would add that I have talked with several friends who had and have canceled gym memberships. The money is not the issue; it is their health. So they are planning to exercise at home and outside at least until the weather turns colder again. Then they will see how it is going with covid. Hard for me to envision much positive for PLNT for the next 4-5 months.
IAMWilliamWallace profile picture
Great article! I'm sorry but you’d have to be crazy to buy this stock. A gym co trading as a growth stock with a PE of 40+ in a recession? Hummmmm, christ ppl are dumb. I expect to see institution filings showing massive sales in the next few weeks.
Thanks for the article.
Agree that the current stock price is a little steep and does not reflect the ugly Q2 results that will be coming.
I feel that a better entry price will come within the next few months.
The question for you is what stock price would attract your investment dollars?

I would imagine a re-test below $30 would be a buy.
How about $40 or $45?

Great article...CA won’t be opening for another 2-3 months minimum. I hope you scare away some from this sinking ship you are doing them a huge favor. It’s on the possible chpt11 list. I wish everyone the best...but stay far far away from this stock.
I pay 10.. My family will be back when they open.. great value and they keep their equipment clean
"Those who lost jobs or businesses are not going to pay the 20 a month"

Lol. 20 freaking dollars a month. Can't take any of your article seriously after this...Imagine thinking a bottom of the floor budget gym is going to lose members, and people are simply going to give up working out for the mighty 20 dollar sum. Amazing due diligence
Quad 7 Capital profile picture
In normal times people keep these when they do not use them. To many average income Americans, they will cut silly needless costs like this. While it may seem trivial "only 20 bucks" if even 10% of members cancel, that adds up. Due diligence? How many people do you think are going to flock to gyms to sign up? We suspect at least 25% less than normal. Factoring that in, it kills the growth story.
I am an 82 year old gym rat and currently relegated to walking 3 hours daily for exercise. It appears gym visits will be severely challenged due to space and distance limitations. I own no gym investments and my current gym has financial issues. Historically fitness centers or gyms have not been good investments.
Planet fitness with low fees and reasonable equipment has survived as the business model works. Moving forward I expect a reduction in membership and would be hesitant to invest in sector.
"This silly needless cost" gets me a discount on my health insurance, and my employer gives me a discount on any gym memberships. Did you know the main way to protect against Corona virus is to be in good shape?All sides agree on this.
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