Planet Fitness (NYSE:PLNT)
According to information from S&P Global Market Intelligence, Planet Fitness (NYSE:PLNT) saw a decrease in the share price of 14% in August. The company’s earnings report was lower than anticipated. Poor market performance throughout the month, down 4%, negatively impacted Planet Fitness’s fortunes.
What’s the Reason?
Profit and loss statements for Q2 2022 were released by Planet Fitness (NYSE:PLNT) on August 9. Locations, memberships, and quarterly income set new highs for the company. However, its stock price dropped after reporting Q2 results since its revenue of $224.4 million fell short of Wall Street’s projections by a few million.
The company’s (NYSE:PLNT) sales in the second quarter increased by 63.5% year over year, and management forecasts revenue growth for the full year to be anywhere between 45% and 50% compared to revenue in 2021. Brian Harbour, an analyst at Morgan Stanley, is pessimistic that the firm’s actual results would meet management’s projections. According to The Fly, he only expects shares to reach $93 per share.
After the company’s Q2 report’s release, some renowned analysts, including Harbour, lowered their share price objective. Max Rakhlenko, a Cowen analyst, reduced his price target for the stock from $110 to $95. Planet Fitness’s lackluster August performance was undoubtedly exacerbated by Harbour and Rakhlenko’s remarks.
Just before the month’s conclusion, Planet Fitness (NYSE:PLNT) shares took a significant hit for unknown reasons. It lost about 13% in the last five trading days of the month, while the market lost only 6%.
Shane McGuiness’ departure from Planet Fitness (NYSE:PLNT) also affects the decline. Before Planet Fitness bought Sunshine Fitness earlier this year, McGuiness was its co-founder and CEO. After the acquisition, McGuiness remained with Planet Fitness, assuming the president for all company-owned fitness centers. But he’s out of here now; he quit the business.
Towards the end of August, Planet Fitness (NYSE:PLNT) stock price plummeted as the news of McGuiness’ resignation became public. However, I believe this to be merely coincidental. The corporation has had a lot of success in its buildings, and it’s unlikely that McGuiness’s departure will affect that.
The Sunshine Fitness purchase brings Planet Fitness’s (NYSE:PLNT) total number of company-owned locations to just under 10%, meeting a key objective of upper management. This purchase is a significant factor in the company’s current record quarterly revenue. In the past, this process merely collected franchise fees from these establishments. We are currently focused solely on earnings.
Although total membership has reached a new high of 16.5 million, the average number of members per branch has decreased. The positive potential is evident here. With a more significant proportion of company-owned stores than in the past, management is anticipating double-digit same-store sales growth this year, which may result in operating leverage and increased profitability in the year’s second half.
While Planet Fitness (NYSE:PLNT) stock did not perform well in August, the company continues to show strength.
Featured Image – Megapixl © Lodrakon