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Planet Fitness tumbles after cautious 2024 guidance despite Q4 growth

AInvestThursday, Feb 22, 2024 9:58 pm ET
1min read

Planet Fitness, Inc. (NYSE: PLNT) delivered its financial report for the fourth quarter and the entirety of 2023, showcasing significant progress within the fitness industry with a 14.4% revenue increase to $1.1 billion. 

This growth was supported by an 8.7% rise in system-wide same store sales and the launch of 165 new locations. Net income for PLNT also escalated to $138.3 million, or $1.62 per diluted share, from the prior year's $99.4 million, or $1.18 per diluted share.

The adjusted EBITDA for the company rose by 19.0% to $435.4 million, demonstrating strong operational and financial management. Despite these positive developments, Planet Fitness presented a cautious outlook for 2024, projecting adjusted EBITDA growth of 10% to 11%, with revenue expected to grow by 6% to 7%. Adjusted net income and adjusted earnings per share are forecasted to increase by 9% to 10% and 10% to 11%, respectively, reflecting a conservative stance amid an uncertain macroeconomic climate.

The introduction of the New Growth Model aims to optimize franchisee returns and streamline capital expenditure, yet the guarded 2024 guidance prompted a sharp sell-off in Planet Fitness shares. This reaction underscores investor apprehension towards the company's ability to sustain its growth momentum in the face of potential economic headwinds.

Additionally, despite the expansion of the company's total U.S. store potential to 5,000, up from 4,000 estimated at its IPO, and a membership increase of 1.7 million since 2022's end, the stock's downturn post-earnings indicates market concerns over the forthcoming fiscal year's performance.

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