Planet Fitness (PLNT) experienced a sharp decline in its stock price on Thursday, plummeting 31% in midday trading after the company revised its 2026 financial forecast downward. The gym chain attributed the revision to weaker-than-expected net member additions during the first quarter, a period that typically drives a significant portion of annual recurring revenue.
Guidance Cut and Revenue Miss
The Hampton, New Hampshire-based company now projects same-club sales growth of approximately 1%, a substantial reduction from its earlier guidance of 4% to 5%. Revenue growth for 2026 is now expected to be around 7%, down from the previous forecast of 9%. Adjusted EBITDA growth is anticipated at roughly 6%, compared to the earlier target of 10%, while adjusted net income is projected to decline by about 2%, reversing an earlier expectation of a 4% to 5% gain.
First-Quarter Performance
For the first quarter, Planet Fitness reported a 21.9% increase in revenue to $337.2 million, with adjusted net income rising to $59.4 million, or 74 cents per share. System-wide same-club sales increased by 3.5%. However, net member additions were approximately 700,000, down from 1 million in the same period last year. The company ended March with about 21.5 million members across 2,909 clubs.
Strategic Pause and Marketing Missteps
CEO Colleen Keating acknowledged that the company's marketing efforts, while successful in attracting fitness enthusiasts, may have strayed too far from its core base of beginners and casual gym users. She cited increased competition in several markets, adverse weather conditions, and financial strain on lower-income customers as contributing factors. In response, Planet Fitness has paused its planned national Black Card price increase to reassess its pricing strategy and has withdrawn its three-year forecast from investor day.
Market Reaction and Analyst Downgrade
The stock fell to an intraday low of $37.08, marking its steepest single-day drop since its 2015 initial public offering, before recovering slightly to trade at $43.92. Trading was temporarily halted due to the volatility. The decline was notably more severe than that of peers; Life Time Group fell nearly 5%, and Xponential Fitness dropped about 2%, while Peloton rose approximately 5%. Analyst Sharon Zackfia of William Blair downgraded Planet Fitness from Outperform to Market Perform, citing the weaker member sign-up trends and the halt on planned price hikes, warning that these factors could limit a rebound in club returns and jeopardize franchised growth targets for 2027.
Outlook and Risks
Investors are now concerned that the company's marketing reset may take time to yield results, or that lower-cost competitors could continue to gain market share as consumers remain cautious. Planet Fitness has flagged several risks, including competitive pressures, challenges in member acquisition and retention, shifts in consumer demand, higher franchisee borrowing costs, and its own debt burden. Despite these headwinds, the company is maintaining its expansion plans, targeting 180 to 190 new club openings this year and placing 150 to 160 sets of equipment in franchisee-run gyms. The key challenge ahead will be reigniting member sign-ups ahead of 2027 without relying heavily on discounts.