Beach Season and Fitness Classes Could Mean a New Profit Opportunity

May 28, 2022

As people are gearing up for beach season and gym classes are reopening, we wanted to focus today on Xponential Fitness (XPOF).

Xponential Fitness owns a variety of boutique fitness brands that offer classes in Pilates, barre, cycling, rowing, dance, yoga, running, boxing, functional training, and stretching.

The company recently increased revenue growth by 73% from the first quarter of 2021 to the first quarter of 2022, but the company did post a wider-than-expected loss related primarily to an acquisition.

The XPOF stock price has dropped since the earnings report and is now down about 15% for the year.

But this could provide an attractive entry point for savvy investors with a long-term outlook.

Here are three reasons why XPOF stock could turn around.

1. A Strong Macro Tailwind

Consumers are dipping their toes in group fitness classes again.

Mentions of attending a fitness class are trending +3% QoQ and +17% YoY.

While they are still nowhere near pre-pandemic levels, when group fitness was absolutely surging in popularity, this is a noted improvement.

Gym membership sign-ups are +16% higher YoY, while consumer mentions of working out at home continue to slide lower.

2. People Love XPOF’s Classes

Consumer Happiness mentions for XPOF are extremely positive, trending +8 points higher YoY, with Positive Sentiment at 85%. (This is extremely high.)

That happiness is primarily driven by the popularity of XPOF’s CycleBar brand, which is trending +9% in overall happiness levels compared to just a year ago.

Even more impressive: Happiness is rising alongside increased buzz.

CycleBar overall mentions have risen by +14% YoY.

When we see companies execute like this — with increasing levels of Consumer Happiness as overall brand buzz is building — we take note.

3. User Growth Is Strong

While mentions of attending a group fitness class are not yet near pre-pandemic levels, Purchase Intent mentions for XPOF are on course to close well above Q2 2019 levels.

Overall mentions for Xponential Fitness are currently trending at +19% QoQ and +85% YoY, while Purchase Intent mentions are rising at an even steeper clip: +25% QoQ and +182% YoY in the current quarter.

Bottom Line: Xponential Fitness’ various group fitness classes are a favorite among consumers, and the popularity of its brands is growing.

The company is also outpacing other fitness competitors such as Planet Fitness (PLNT), Peloton (PTON), and Nautilus (NLS).

We’ll continue to monitor XPOF as it expands its digital presence in collaboration with Lululemon’s MIRROR offering.

But for now, data is looking increasingly positive.

Andy Swan
Founder, LikeFolio