Are Fitness Stocks Still In Shape Right Now?
Giorgio Trovato on Unsplash

Are Fitness Stocks Still In Shape Right Now?

18th December 2021 | 11 min read

The fitness industry experienced rapid growth over the last decade, with the boost of fitness influencers, “fitspiration” on social media, athleisure by fashion brands and expansion of fitness centres. Before the outbreak of COVID-19 pandemic, the global health club industry finished the decade with a record-breaking revenue totaling USD 96.7 billion in 2019.

But the pandemic has forced many industry players to close their physical branches. Deloitte estimates that the fitness industry’s revenue in Europe fell by almost 33 % in 2020, while IHRSA estimates the revenue of the US’s fitness industry dropped 58% in the same year.

On the other hand, the pandemic led many people to abandon the habit of hitting the gym regularly and provided them with incentives to try alternative forms of exercise or to buy interactive devices like a Peloton or Mirror. The American College of Sports Medicine forecasted online training would be the top worldwide fitness trend in 2021.

Fortunately or not, with the ease of the pandemic in 2021, consumers have started to take greater care of their well-being and hit the gym again. For instance, Europe’s second-largest gym brand PureGym said it had 1.6 million members at the end of June 2021, which is about 94% of its June 2019 level. These figures show enormous growth opportunities for fitness centres after social restrictions are lifted,  but simultaneously pose challenges to the home fitness sector. 

Meanwhile in China, the country’s fitness industry is expected to reach USD 5.9 billion by the end of 2021, according to iiMedia Research. In 2020, there were 70.29 million gym members in China with a relatively smaller penetration rate of 4.87% compared with 19% in the US. This means China’s gym industry has a great potential for growth.

China’s fitness sector seems to be ready for a boom as the government issued a national fitness plan in August, setting an ambitious goal of 38.5% of residents exercising regularly, and for its sports industry to be worth RMB 5 trillion (USD 773.6 billion) by 2025. Investors are also seeing good signs as the country’s leading fitness app Keep is reportedly planning a public listing in Hong Kong.

In short, the global fitness industry overall has experienced ups and downs with new demands from consumers in the past two years. We take a look at the top stocks to see if popular fitness stocks are still in shape.

Image credit: Peter Hale on Flikr

1. Planet Fitness (NYSE: PLNT)

Business: physical fitness centre
Stock YTD performance: +11.09%

Started in 1992, Planet Fitness is one of the largest franchisers and operators of fitness centres based in the US. Its gimmick is its low-cost monthly fees starting at USD 10. It also offers small group training sessions, personalised exercise programs and certified trainers. The company went public in 2015. 

Planet Fitness operates in more than 2,000 locations in the US, Canada, Latin America, and Australia. Most locations are franchises but the company also directly runs more than 100 gyms. It currently has more than 15 million members.

Planet Fitness seems to have a bad reputation as a “meme gym” due to its puzzling management strategies, which can be a potential concern for its future growth.

For example, one of its “judgement free” policies is to set up a lunk alarm for users who grunt, drop weights or judge others, so that new members do not feel intimidated or stressed. But a lot of users said this alarm is triggered too easily and the staff would just ask the offending members to leave the gym without making clear of the situation.

Planet Fitness also gives away free pizza and bagels, which some gym enthusiasts find contrary to the healthy lifestyle the industry preaches. While luxury gyms or instagrammable high-end gyms are popular in the social media age, Planet Fitness is often criticised for its poor aesthetics, as its gyms have  a purple and yellow colour scheme.

Nonetheless, investors can remain confident for now as its shares soared more than 11% on November 4 after reporting stronger-than-expected Q3 2021 results. The company recorded USD 154.3 million revenue during the quarter – a 46.4% YoY increase. 

It also opened 24 new stores in the quarter, bringing its total number of locations to 2,193. This shows that Planet Fitness was strong enough to absorb market share while its competitors closed down during the pandemic, and has recovered from the pandemic loss.

The revenue growth was due to three factors.. First, the franchise model can bring high operating margins with low capital intensity. Planet Fitness’s franchise model helped it achieve revenue growth of 26.1% in Q3 with increased franchise royalty revenue and NAF revenue.

Corporate-owned stores saw a 55.2% increase in revenue due to the opening of seven new stores from July 2020. Revenue from the equipment segment also went up by 101.7% because of higher volumes of equipment sales to existing franchisee-owned stores, and an end of sale prices offered during the pandemic.

The company expects adjusted earnings per share of 75 cents to 80 cents for 2021, which would surpass the analyst consensus of 73 cents. Planet Fitness’s CFO is optimistic about future opportunities as there are more people prioritising their health and Gen Z members are outpacing other age groups in terms of membership growth.

Image credit: Peloton

2. Peloton (NASDAQ: PTON)

Business: home equipment, fitness classes
Stock YTD performance: -70.92%

Peloton Interactive, Inc. is an exercise equipment and media company based in New York 

established in 2012. It mainly focuses on producing indoor fitness equipment including cycles and treadmills, which come with screens for users to join online fitness classes remotely after paying subscription fees.

Its online classes such as indoor cycling, yoga, strength training and even meditation. Currently, it claims to be the world’s largest interactive fitness platform with more than 6.2 million members. 

Since the pandemic outbreak in 2019 had forced physical fitness centres to shut down, home fitness became a new idea for fitness fanatics to explore. Peloton quickly grabbed investors’ attention and went public in 2019. It was valued at about USD 8 billion at its IPO price.

Although the high price tag of its products made investors doubt its growth at the first place, the company’s shares experienced a rocketing growth in 2020 with more than 440% yearly gain and reached a peak in January this year. 

Then its shares experienced a steep fall of 17.6% in February as its Q2 2021 report revealed the company’s concern that ongoing inventory and supply chain issues may hurt profits in the near term. What’s worse, the company’s scandals started to shake investors’ confidence starting from March.

In March, Peloton warned parents to keep children away from its treadmills, after a fatal accident involving a six-year-old child, who was pulled underneath the rear of its Tread+ machine. Peloton only recalled its machines in May. The company also received 72 reports of injuries including broken bones, cuts and grazes at that time. This raised concerns over its product safety and management style. 

Peloton’s stock has lost over half of its value since November 4 after it slashed its 2021 sales forecast by USD 1 billion. The company said that demand for its equipment was slowing faster than expected as people returned to pre-pandemic habits of working out in gyms. It is also crippled by the ongoing global chip shortage, supply chain delays and soaring freight costs, which has added to its operating costs. 

Image credit: Shuhua Sports

3. Shuhua Sports (605299.SH)

Business: fitness equipment
Stock YTD performance: 49.88%

Founded in 1996, Shuhua Sports (SHUA) is a leading manufacturer of fitness equipment for home use and commercial gyms in China. It has four manufacturing bases and two operating centres in China with its global business covering over 60 regions in Europe, America, the Middle East and Southeast Asia.

In 2020, Shuhua went public on the Shanghai Stock Exchange as the first listed sports goods company in the A-share market. In 2021, the company was chosen as the official fitness equipment supplier for the Beijing 2022 Winter Olympics and Winter Paralympics. 

Its stock performance is expected to benefit from China’s burgeoning fitness market and the Chinese government’s strong advocate to include fitness into daily life. When China announced its national fitness plan on August 3 this year, Shuhua’s stock price recorded an increase of more than 20% in two days.

According to its 2H 2021  report, Shuhua had an operating revenue of RMB 728 million, which is a YoY increase of 18.72%. The operating profit was about RMB 75 million, an increase of 1.83% over the same period last year.

One of the benefits of its business model is that it covers fitness equipment for both indoor and outdoor facilities, and also for commercial usage such as exhibition in retail stores. 

In the first half of 2020, the company’s revenue ratio relied heavily on indoor fitness equipment due to rising home fitness trends and fewer openings of retail stores. But the company also enjoyed the benefits of China’s national policies after pandemic fears were minimised.

The gross margin of outdoor equipment sales surpassed those of indoor equipment and retail store exhibition, because the company has actively worked with local governments to build community fitness centres. It was reported that from 2017 to 2020, Shuhua helped set up more than 200 community fitness centres in Wenzhou. The company is also seizing the youth and elderly market groups by providing fitness solutions in campus and nursing homes. 

To develop a more rounded marketing strategy, Shuhua set up its flagship stores on e-commerce platforms like Tmall, JD and Vipshop. It has also partnered famous athletes to host live streaming events and engage with consumers.

However, sports stocks are still relatively niche in China’s market. Investors may have to patiently look forward to the sector’s performance during the Beijing 2022 Winter Olympics and Winter Paralympics later.

Image credit: KEEP

4. Keep 

Business: mobile fitness app

Keep is a Chinese mobile fitness app released in 2015 by Beijing Calories Technology. The app provides fitness videos, customised exercise sessions, social networking and an e-commerce store for fitness wear, equipment and weight-conscious snacks.

According to Satista, Keep ranked as China’s largest sports app, with about 13.2 million monthly active users as of September 2021. It was billed as the “dark horse” in China’s fitness app industry after reportedly reaching 1 million users in just 105 days.  

Last year, Keep’s valuation reportedly surpassed USD 1 billion to be considered a unicorn after it raised USD 80 million in a Series E round. Currently it has raised a total of USD 614 million in eight rounds of funding supported by SoftBank Vision Fund, Tencent, Hillhouse Capital Group and more.

With its fast success, the market anticipated its IPO plan would soon arrive. It was reported several times this year that Keep is considering a Hong Kong offering as the US route has become more difficult with regulatory concerns. People familiar with the matter said the company originally filed confidentially in May for a US IPO and planned to raise about USD 500 million.

However, there are signs showing that Keep may not be ready to buff up. At the beginning, the “tech + fitness” model was fresh and exciting to users. The routines were easy to do alone and beginners could easily follow the workout schedule provided by the app. The app also provided a social networking function which forms an interactive and motivational circle for fitness lovers.

The biggest pain point of Keep is to transfer its large user base into profitable income, as the company cannot solely rely on subscription fees and course revenues to sustain its business. 

In 2019, someone claiming to be an employee of Keep revealed that the company had laid off 300 people from its 800 employee base. Although Keep denied the information, it confirmed that the company was “optimising its personnel”, which involved 10% to 15% of its employees.

A widely circulated analysis rumoured to be written by a previous employee said Keep’s business growth has encountered “bottlenecks due to its failure in commercialisation”. Previously, Keep tried to develop alternative business channels but the results were not satisfactory either.

In 2017, Keep released fitness products like treadmills, yoga mats and smart fitness watches, but it is facing increasing competition from e-commerce stores and big tech brands like Xiaomi. The company also tried to sell healthy and low-calorie food products in recent years, but the nutrition quality of some products was challenged by China’s regulators last year for its lower- -than-standard nutritive value.

In 2018, its first offline fitness centre called Keepland opened in Shanghai. Its positioning as a high-end fitness centre resulted in overwhelming operating costs. Only one year later, the company shut down three centres and has not expanded its gym business since then. 

In terms of content creation, the app also cannot excel its mature and strong components. The same video can earn millions of view counts on platforms on Douyin or Bilibili, but may only have a few hundred views in Keep. 

Moreover, the company failed to retain some of its users due to a lack of market research. Seasoned users want more advanced training programs after advancing from beginner courses, which the app so far cannot offer. The president of FITURE, one of Keep’s competitors, mocked on Weibo that, “Keep is doing good, except for keeping its users”.


After the loosened social restrictions, the physical gym sector is seemingly a more stable business than home fitness providers and mobile fitness apps as people are ready to return to their long-lost fitness routines. 

With new demands arising amid the pandemic such as virtual training classes or more flexible pricing models, industry players need to diversify their offerings to retain their clients and stay in their pre-pandemic shape.

Written by Lawati Ning Sang

Ning Sang previously worked as a business news reporter in Apple Daily with experience in feature writing, video production and news anchoring. Her past news coverage included stocks, real estates and immigration policies. She is currently interested in writing about the opportunities and challenges in Asian markets.

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