Seven of 2020’s winners and losers among fitness stocks
The pandemic has thrown a wrench into every facet of society, and with many businesses still unable to safely reopen their brick-and-mortar locations, millions of Americans find themselves at home full time. This dynamic has buoyed several fitness stocks, which have enjoyed growing demand from consumers with worsening cabin fever. At the same time, others in the industry have suffered terribly due to less auspicious business models unable to withstand the new realities of 2020. From apparel companies and home workout equipment manufacturers to gyms and device makers, here are seven fitness stocks that stand out as some of the biggest winners and losers from 2020’s pandemic.
Peloton Interactive (ticker: PTON)
One of the highest-profile beneficiaries of the pandemic among fitness stocks is Peloton, the maker of high-tech workout equipment and streaming interactive workouts led remotely by instructors. Peloton’s signature product is its screen-equipped bike, which currently retails for $1,895 or $2,495, depending on the model. Access to Peloton’s guided workout classes runs extra, at $39 a month for streaming straight to your Peloton device or $13 a month for mobile-only access through its app. Last quarter, revenue was up a remarkable 172% year over year as the company swung to a profit, making $89.1 million versus a $47.4 million loss in the same quarter a year ago. Shares have roughly tripled year to date.
Apple stock has also easily outperformed during the pandemic, and though by no means is it a pure-play fitness stock, Apple’s September showcase rolled out new products and services that telegraph intentions to double down on health and fitness. The Apple Watch Series 6 will include a blood oxygen sensor that will measure your oxygen saturation over time, displaying and storing it in its health app. Additionally, the Cupertino, California-based tech giant announced Apple Fitness+, a new, personalized guided workout service offered through the Apple Watch. Fitness+ adopts the remote workout strategy that has helped buoy Peloton, and it beefs up Apple’s high-margin services segment. A Fitness+ subscription will cost $9.99 monthly or $79.99 per year.
Before Peloton was a twinkle in an eye, there was Nautilus, the 34-year-old fitness products company. Consumer demand for stationary bikes and home workout equipment is so robust that it has naturally helped to lift Nautilus as well, which saw net sales growth of 94% last quarter, with $114.2 million in sales. The stock, which was in the gutter at less than $2 a share as a penny stock at the beginning of the year, is up around 800% in 2020 at the time of this writing. NLS now trades around $15 per share. The prominent investment research firm Citron Research believes shares of the roughly $500 million company still have room left to run. Nautilus, which owns the Bowflex brand, is also getting into connected fitness and subscriptions with its newer models.
Lululemon Athletica (LULU)
Athleisure brand Lululemon has also seen shares heat up in 2020 as it rides the trend in fitness stocks and stay-at-home workouts. Shares of LULU are up about 35% year to date. Part of the market’s confidence in the company stems from its recent $500 million acquisition of Mirror, maker of the eponymous wall-mounted reflective screen that streams individualized workouts via the subscription model. Another bullish point is e-commerce revenue, which rose 155% last quarter and more than offset the 51% decline in revenue from company-owned stores. Online sales accounted for more than 60% of overall sales and are expected to keep growing at impressive rates.
Planet Fitness (PLNT)
Not all fitness stocks can be winners. Unfortunately, gym operator Planet Fitness has predictably suffered from the government-mandated shutdowns and slow reopening of gyms across the U.S. Total revenue fell nearly 78% last quarter from the same period a year ago to $40.2 million, and although such severe declines should only be temporary, there’s still a long path back to normalcy. On the brighter side, 1,477 of its 2,059 locations had reopened as of June 30. PLNT’s heavy emphasis on franchising helps curb some of the costs associated with company-owned stores, and analysts do project a swift rebound in 2021, with revenue expected to jump 67% — but there’s a lot of uncertainty surrounding that number.
Town Sports International Holdings (CLUB)
There’s no bigger loser on this list than Town Sports International Holdings, which still trades publicly at the time of this writing but filed for bankruptcy protection on Sept. 14. The company owns hundreds of gyms, largely in the Northeast, and operates them under brands including New York Sports Clubs and Washington Sports Clubs. Although CEO Patrick Walsh bought $6.5 million in company shares on Jan. 3, that vote of confidence hasn’t translated to the bottom line. The company lost $136 million in the first quarter, it failed to file a second-quarter report and trading was suspended on the Nasdaq on Sept. 24.
Under Armour (UAA, UA)
Unlike Lululemon, athleisure company Under Armour has had a rough 2020, with shares essentially getting cut in half as a barrage of negative catalysts hit the stock. To begin with, the business is under investigation for its accounting practices, which clouds the investment outlook and heightens the perceived risk of the stock. The company has also been forced to restructure amid the pandemic; it recently announced it would be laying off 600 people and that its restructuring plan would cost somewhere between $550 million and $600 million. Revenue fell 41% last quarter, and analysts expect the company to lose money this year and barely break even in 2021.
Seven fitness winners and losers in 2020:
— Peloton Interactive (PTON)
— Apple (AAPL)
— Nautilus (NLS)
— Lululemon Athletica (LULU)
— Planet Fitness (PLNT)
— Town Sports International Holdings (CLUB)
— Under Armour (UAA, UA)