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Why The Beachbody Company Stock Plummeted 27.5% at the Open Today

By Reuben Gregg Brewer – Nov 16, 2021 at 10:29AM

Key Points

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The fitness subscription company reported earnings and investors were not at all pleased with the results.

What happened

Shares of The Beachbody Company (BODY 5.38%), which provides fitness subscription services and sells fitness and wellness products, fell sharply in early trading on Nov. 16, dropping as much as 27.5% in the first few minutes of trading. About a half an hour into the day the stock was still off by roughly 25%. The company's post-close earnings release on Nov. 15 was the likely cause of the decline. You don't need to look too far to see why investors were so unhappy.

So what

On the top line, The Beachbody Company's third-quarter 2021 sales were down 17% year over year. Digital revenue dropped 5% and nutrition sales fell 29%. The company's connected fitness revenue was $5.9 million, however the division wasn't a part of the company in the year-ago period (it was acquired in June), so there's no comparison point. That said, of the 14,700 exercise bikes sold in the third quarter only 44% were delivered, so revenue from these sales, and associated subscriptions, wasn't recorded in that three-month period. The company lost $0.13 per share in the third quarter versus a profit of $0.05 per share in the same quarter of 2020. 

A hand drawing a supply and demand graphic on a blackboard.

Image source: Getty Images.

None of that is particularly good news, but don't worry, it gets worse. The company also lowered its full-year 2021 revenue guidance from a range of $930 million to $960 million to a range of $820 million to $830 million. There were two notable reasons for this change. First the company's efforts to attract new customers didn't live up to expectations. And, second, positive trends from the pandemic lockdown period appear to be reversing. Notably, total streams fell 26% year over year in the third quarter, which means subscribers aren't using the company's services as much. To be fair, the company's results are notably improved from 2019, but it seems as though investors are starting to realize that 2020 results are not necessarily indicative of future performance. And, as of yet, there doesn't appear to be a good indication of how much pullback from the peak there may be. 

Now what

The Beachbody Company was able to benefit from social distancing and work-from-home trends during the 2020 lockdowns. However, those were clearly temporary events. Now that the world is opening up again, it looks like last year was more of a windfall year than a new normal. Most investors should probably wait for clearer performance trends before making a commitment here.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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