A Classic Fitness Play Amidst Weight Loss Drug Hype

October 12, 2023

In a world increasingly enamored with quick fixes and magic pills, there's one stock that's caught our eye, well ahead of the New Year's resolution rush.

Amidst all the buzz surrounding Ozempic and the latest weight loss drugs, are we overlooking a golden opportunity with a tried-and-true classic?

The Unexpected Leadership Shift

Planet Fitness, a household name in the fitness industry, recently made headlines with the sudden departure of its long-term CEO, Chris Rondeau. This move left investors scratching their heads, leading to a sharp decline in the company's stock price. The challenges of reduced equipment placements, rising construction costs, and the hunt for prime retail spaces have only added to the concerns.

Stepping into the leadership void is Craig Benson, former governor of New Hampshire and a seasoned member of the Planet Fitness board. With the company on the hunt for a permanent CEO, it's a pivotal moment in its corporate journey.

The Ozempic Effect: Is It All It's Cracked Up to Be?

While Ozempic has been the talk of the town, its ripple effects have raised eyebrows. Investors are wary of brands that might take a hit if consumers flock to this "magic pill." But as we've pointed out with giants like PEP, the consumer data for PLNT tells a different story.

Planet Fitness: Defying the Odds

Despite not being in its peak season, Planet Fitness mentions have risen by +7% YoY.

Web visits have followed suit, marking a +4% increase, marking a lower off-season valley than last year.

This is a significant turnaround from a quarter ago when web traffic was trending -7% YoY.

The consumer happiness quotient? A stable 60% positive.

Last quarter's performance further cements the brand's resilience.

With a membership boost led by Gen Z, an 8.7% growth in same-store sales, and 26 new store additions, Planet Fitness is on an upward trajectory. Their ambitious plan to invest $250 billion to tap into the vast non-gym-going population speaks to its long-term vision.

The Bottom Line

Planet Fitness has earned a spot on our watch list this season.

While challenges persist, from member retention to the high costs of new gym construction, the improving consumer metrics are hard to ignore.

With the stock price taking a nearly -30% hit over the past three months, there's potential brewing for those with a long-term investment horizon.

In a world chasing after the next big thing, sometimes it pays to bet on the proven classics.

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