I should have known the day would come when I would get a chance to incorporate a healthy squat regimen into market analysis.
It honestly brings me joy to see consumers lifting heavy things again. It’s good for us, right?
We know the fitness industry was hit hard by the pandemic.
At a time when you would have thought staying healthy and active may have been a priority, gyms in most countries worldwide were forced to close as countries went into lockdown.
Before that, revenue of the fitness, health, and gym club industry in the United States had been steadily climbing for a number of years, hitting a peak of $37.46 billion in 2019.
Thankfully, consumers are getting out of the house and back in the gym.
Just look at these trends!
These trends serve as major tailwinds for gyms… especially Planet Fitness.
Here’s why we’ve got a close eye on the Judgement Free Zone.
The Case for Planet Fitness
- Ease of adoption.
After a year (or two) off, many consumers may be feeling self-conscious.
According to a study from fitness technology company EGYM, the motivation for going to the gym has changed post-pandemic, with more people focused on health than aesthetics.
This potentially creates a new wave of fitness lovers and gym-goers who may feel more comfortable with Planet Fitness’ Judgement Free Zone policy.
In addition, the barrier to entry is low: The company’s monthly membership costs $10.
PLNT ended 2021 with 15.2 million members, an increase of 1.7 million members since the end of 2020, and more than the 14.4 million members reported at the end of 2019 (pre-pandemic).
And that number is rising.
Consumer mentions of signing up for a Planet Fitness membership have risen by +14% year-over-year (YoY) after a nice New Year’s resolution boost.
To see mentions continue to rise through March is, quite frankly, unheard of.
- Planet Fitness membership provides high value at a low cost.
Overall, New Gym Membership Mentions are trending +33% quarter-over-quarter (QoQ) and +7% YoY, which, based on the previous chart, means Planet Fitness is bucking the industry average.
And with inflation at 40-year highs, Planet Fitness’ low-cost option makes it a fantastic choice for those who are looking to reduce their spending or new gym-goers who don’t want to blow their budgets.
Even so, 62.5% of members have upgraded to the company’s Black Card, the $22.99 monthly membership option that lets customers access any Planet Fitness location along with other perks.
- Planet Fitness is successfully engaging youth.
Planet Fitness revealed that Generation Z — people born between 1997 and 2012 — was the fastest-growing group that took out memberships in 2021, a trend that has continued into 2022.
The company mentioned that Gen Zers “continue to join, quite a bit above pre-COVID levels.”
This is a positive sign for long-term recurring revenue.
But it’s more than just Gen Z joining the gym.
If we look specifically at Consumer Purchase Intent Mentions, or in other words, Consumer Demand, we can see there was a clear trend upward before the pandemic.
And even though LikeFolio data has yet to show demand back at previous levels, mentions are on course to close Q1 significantly above the previous few quarters, +53% QoQ and +23% YoY.
Remember, this growth comes at a time when Planet Fitness memberships are already above the pre-pandemic period.
If Consumer Demand data moves back to previous highs, Planet Fitness memberships could really outperform this year.
OK, so what about other fitness companies?
Planet Fitness has outperformed both Peloton and Nautilus over the past year when it comes to Consumer Demand.
And this was a year in which many places had some form of lockdown.
Summary: Planet Fitness to Continue Its Rise
LikeFolio data, along with other macro factors, shows a post-pandemic alignment that signals potentially strong growth in Planet Fitness memberships in the near future.
The combination of the company’s low price and surging inflation, along with a change in fitness motivation and Planet Fitness’ Judgement Free Zone policy, makes it the ideal choice for consumers looking to work out.
Alongside those factors, we have increasing Consumer Demand that has yet to reach pre-pandemic highs, despite memberships already topping previous numbers, and a rise in New Membership Mentions.
When the numbers line up as they do, an opportunity to get long may present itself sooner rather than later, especially after the recent pullback in PLNT’s share price.
There are of course external factors that are impacting stocks in general right now, but Planet Fitness is one to keep a close eye on for a potential move in the not-too-distant future.