Can Planet Fitness Get Its Growth Back in Shape?

Key Points

• Planet Fitness shares have fallen about 51% this year, but analysts hold a Moderate Buy consensus with a price target implying more than 30% upside.
• Same-club sales growth has slowed sharply to about 1% for the full year, and membership has stayed flat near 21.5 million despite continued new club openings.
• Investor sentiment has also been rattled by fears that AI assistants could eliminate paying but inactive gym members, though UBS has downplayed that threat.

Planet Fitness NYSE: PLNT is no longer the heavyweight in the gym business that it once was.

A previously reliable growth stock in the consumer discretionary sector, the company is facing one of its toughest growth challenges in years. Its shares have fallen sharply over the past year, along with investor confidence. But the outlook from analysts is not so bleak.

The stock price is up nearly 30% over the past month, revenue is expected to keep increasing, and the analyst consensus price target implies an upside of another 30%.

The debate is really whether this is a classic contrarian buying opportunity or the beginning of a structural decline.

Q3 Earnings Put Planet Fitness's Growth Problem to the Test

Third-quarter earnings, set to be released on Nov. 5, will show the trajectory.

Analysts are expecting earnings of about 80 cents per share on revenue of $347.49 million. That compares with similar earnings per share a year ago, and a more than 5% increase in revenue.

Already, the company’s second-quarter results, released Aug. 6, showed a business that is still growing, though slowly. Total revenue rose 7.1% to $365.2 million, above analyst projections, with growth across its franchise, corporate-owned club and equipment segments.

Net income attributable to the company rose to $67.1 million, with diluted earnings per share of 87 cents, up from 69 cents a year earlier, also above analyst expectations. Adjusted EBITDA also grew, increasing $5.1 million to $152.8 million.

The quality of the beat, however, is worth noting. For the three months, adjusted net income actually declined $4.1 million to $68.4 million from a year earlier, dragged down by a $7.2 million increase in net interest expense and margin compression in equipment sales due to franchisee discounts. Part of the higher interest expense stemmed from additional borrowings used to fund share buybacks, such as the $200 million stock repurchase executed in the second quarter.

More Gyms, Flat Membership: Planet Fitness's Growth Challenge

The membership picture also drives the bear case. Systemwide same-club sales grew just 1.7% in the quarter, a fraction of the growth the company delivered in prior years.

In addition, the company's own full-year guidance now calls for only about 1% same-club sales growth, down from its original forecast of 4% to 5%. The company reaffirmed that lower outlook in August, underscoring the challenges facing its membership growth strategy.

Even so, the company is still opening clubs at a steady clip. During the quarter, 23 new clubs opened out of a plan to open 180 to 190 new locations this year.

In all, the company counted roughly 21.5 million members across 2,930 locations as of June 30. Despite the expanding club network, membership remained essentially flat from Q1, when the company also reported approximately 21.5 million members. That raises questions about whether Planet Fitness can reignite membership growth while maintaining its expansion plans.

Analysts See 30% Upside Despite Membership Concerns

Even with the concerns, analysts have given the stock a consensus Moderate Buy rating on balance. With 22 analysts covering the stock, 12 rate the company Buy (including one Strong Buy), nine rate it a Hold, and one recommends a Sell.

In all, the 12-month price target is $69.34, implying more than a 30% upside, with the highest target at $106 per share and the lowest at $50 per share. That wide range highlights the uncertainty surrounding Planet Fitness's recovery. While some analysts see considerable room for appreciation, others appear less convinced that the company can overcome its slowing growth.

The share price drop this year shows how far sentiment has fallen. Since the start of the year, shares have lost about 51% of their value.

Planet Fitness's Recovery Hinges on Membership Growth

What has made the stock especially volatile in recent weeks is a debate over AI.

In late September, the shares fell nearly 20% after reports suggested that new AI assistants, including Meta's Muse, could strip away so-called ghost members, or people who pay but don’t use their memberships.

Other subscription-based companies were also hit as investors worried the development could threaten subscription revenue from members who continue paying despite rarely visiting their gyms.

Planet Fitness shares subsequently rebounded sharply in October after UBS pushed back on those concerns, arguing the threat to membership growth from AI was manageable. UBS also pointed to improving membership trends in September and early October.

Deutsche Bank has separately flagged pressure from rising high-volume, low-price competition. Although most low-price gyms are privately owned in the United States, more upscale competitors fight for the affluent customers.

A Turnaround Depends on Membership Growth

For Planet Fitness, there is plenty to build the bear case.

Same-club sales growth has virtually stalled, the company's full-year guidance points to much weaker growth than in 2025, and the low-cost gym market is getting crowded. The AI debate has added a new source of volatility, and it is too early to judge its real impact.

At the same time, the company has real scale, a proven franchise model, and the cash to keep buying back shares. Analysts point out that Planet Fitness’ low-cost, high-value consumer proposition makes it highly resilient to shifting macroeconomic conditions.

Roughly 90% of clubs are owned and operated by independent franchisees, which insulates the parent company from the capital intensity of running gyms and gives it a royalty-like revenue stream.

For contrarian investors who like stocks at depressed valuations, Planet Fitness is worth a look.

But watch the third quarter earnings, if not the one or two quarters after that. Membership stagnation is a central concern and likely one of the factors weighing on the shares. With any evidence of a reacceleration in same-club sales, Planet Fitness stock could regain its strength.