Aug 12, 2019 - Economy
Planet Fitness' stock looks fatigued
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After a rocket rise over the past five years during which it jumped from $17.81 a share in August 2015 to more than $75 a share in April, Planet Fitness' stock has been unimpressive in recent months. It sold off after the company beat earnings expectations Tuesday but missed on expected growth.
What's happening: Concern is beginning to grow about the sustainability of the company's business model, which relies on consistently bringing in members who don't actually use the gym and churning out increasing revenue from franchisees, the Wall Street Journal's Spencer Jakab writes.
- "Planet Fitness makes much of its money by keeping 7% of membership fees paid to franchisees, who control over 95% of its gyms. It raised its take from 5% back in 2017. No small part of its growth in the past couple of years has reflected this increase in what it charges," per Jakab.
- "While franchisees keep showing up, though, there are limits to how high the parent company can take the fee without choking off growth," he writes.
Go deeper: Ex-Twitter CEO is shutting down his fitness startup
