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Why Planet Fitness Stock Plunged Today

By Joe Tenebruso - Updated Mar 5, 2020 at 3:24PM

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Sweaty gyms may not be the best place for people to go in the middle of the coronavirus outbreak.

What happened

Shares of Planet Fitness (PLNT 1.88%) dived more than 10% on Thursday, as fears related to the COVID-19 coronavirus epidemic intensify.

So what

Planet Fitness has been an incredible growth stock since its initial public offering in 2015. The gym chain's low-cost membership fees and non-intimidating atmosphere have proved to be extremely popular among fitness enthusiasts of all ages, helping its membership base swell to more than 14 million people across 2,000 locations. In turn, Planet Fitness' revenue and operating profits have surged in recent years, driving its stock price up by more than 400% as recently as February. 

But companies whose sales and profits are likely to be hurt by the coronavirus outbreak have seen their shares get pummeled in recent weeks. Planet Fitness certainly fits this description, and investors are beginning to realize that its gyms may be particularly exposed to coronavirus-related sales shortfalls.

A person pointing to digital chart that rises than falls

Planet Fitness's shares fell sharply on Thursday. Image source: Getty Images.

Now what 

With plans as low as $10 per month, many people may choose to keep their Planet Fitness memberships, so the gym chain may not experience as big a wave of cancellations as many bears currently expect. But coronavirus-related fears are likely to result in fewer new memberships, which could lead to a significant deceleration in Planet Fitness' growth in the quarters ahead.

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