What happened

Shares of Nautilus (NYSE:NLS) dropped 11% today after Moderna announced that its COVID-19 vaccine candidate had achieved a strong efficacy rate of 94.5% in initial trials, sparking hopes that the pandemic's end is on the horizon. The news came a week after Pfizer and BioNTech said they achieved a 90% effective rate with their vaccine candidate. Nautilus is among the stay-at-home stocks that have become inadvertent beneficiaries of the public health crisis as consumers shun gyms and instead exercise at home.

So what

Much like Peloton, Nautilus has seen sales skyrocket amid the pandemic, which has forced many retail gyms to close. In some cases, those gyms have declared bankruptcy and won't be reopening their doors. Peloton stock gained slightly today, potentially because its business may be more resilient due to a higher proportion of subscription revenue compared to Nautilus.

Glass gym wall with sign on it saying it's closed due to COVID-19, with gym machines and equipment visible inside

Image source: Getty Images.

Earlier this month, Nautilus reported a 152% surge in sales in the third quarter as the coronavirus boosted demand for home fitness equipment like the company's popular Bowflex products. However, subscriptions accounted for less than 2% of revenue, compared to Peloton, which derived 21% of its revenue from subscriptions last quarter. Nautilus is much more reliant on ongoing equipment sales.

Now what

While progress on two separate vaccine candidates is clearly good news in the broader fight against the coronavirus, investors are now pricing in the possibility that a major sales driver for home fitness equipment, a considerable discretionary expense, will fade within a year or two.

On the last earnings call, Nautilus CEO Jim Barr suggested that the return to gyms would be gradual and that there would be a "new normal" for fitness enthusiasts.

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