Planet Fitness stock upgraded to Buy from Raymond James
Yahoo Finance Live checks out gym chain Planet Fitness' stock as consumers re-consider gym memberships in the late-pandemic.
Video Transcript
SEANA SMITH: All right, my play today is Planet Fitness. Raymond James upgrading the stock to a buy in its evaluation call. Shares down nearly 40% since the start of the year, but Raymond James is making the argument that the gym chain's business model is, quote, "highly resilient and recession resistant." Now people are slowly returning to the gym, its client base that passed the 16 and 1/2 million mark here during the second quarter.
Josh, it makes sense. It could be a potential inflation hedge here when you take into account that gym memberships are very cheap. I believe they're right around $10 a month. So it makes sense there. Just the fact, though, that it's down nearly 40% year to date when you compare the current economic landscape to what we were in at the beginning of the year, obviously, things have changed. We're more concerned about inflation. But still, there were certainly a lot of headwinds then as well.
JOSH SCHAFER: Well, and you look at what Raymond James pointed out when they talked about the global financial crisis and how Planet Fitness performed then, right? Planet Fitness produced same store sales growth, quarter over quarter, throughout the entire financial crisis in 2008, 2009. So we're probably not headed for that kind of a recession. And they performed well back then. So I feel like they're kind of pegging it to they're probably going to perform well this time around, too. As you said, $10 for a subscription?
SEANA SMITH: Not bad.
JOSH SCHAFER: Not a bad thing when we're talking about inflation.
SEANA SMITH: Yeah, that's true.
JOSH SCHAFER: But--
SEANA SMITH: It keeps costs down.
JOSH SCHAFER: Right, exactly.
SEANA SMITH: And it's also so low, like, we were saying during the break, you're less likely to cancel it because you probably forgot about it because it's just $10 a month.
JOSH SCHAFER: What I'm wondering with it, though, too, is, who's coming back to the gym now? Is everyone already back that was going to come back? Are people getting-- are you still missing people, or is everyone back at this point from COVID?
SEANA SMITH: Well, yeah, and that also points to a larger discussion, right? So much of the stay-at-home fitness apps that have really gained in popularity-- you see Peloton, although that stock certainly has been abysmal here year to date and over the last couple of years since it did peak. But certainly, a lot of people who are loyal gymgoers bought a Peloton or maybe are using the app or using some of the other devices that are out there. And they're not going back to the gym. I'm one of them.
