Planet Fitness witnessed its stock value drop by more than 30% on Thursday, marking its most substantial single-day decrease ever. This downturn occurred after the company disclosed lower-than-anticipated membership growth for the first quarter and adjusted its financial forecast for the entire year of 2026 downwards. The gym operator ended the first quarter with approximately 21.5 million members across 2,909 locations, as per company statements. Although total revenue saw a 21.9% increase to $337.2 million, and same-club sales rose by 3.5%, the net member growth failed to meet expectations during what is typically the company's strongest period for new sign-ups.
Several elements contributed to the first-quarter results, as explained by Keating to analysts. These included marketing messages that did not effectively reach their target audience, heightened competitive pressures in certain markets, adverse weather conditions, and a difficult macroeconomic climate. Keating also attributed the shortfall partly to internal and external obstacles that emerged during the crucial member acquisition window. In response, Keating assured analysts that the company would take prompt action to broaden its reach and ensure its messaging is both visible and resonates with fitness beginners and more casual gym-goers.
The company revised its full-year 2026 targets across several key metrics. The projection for same-club sales growth was significantly reduced to roughly 1%, a substantial decline from the previously guided range of 4% to 5%. The revenue growth outlook was trimmed from 9% to approximately 7%, adjusted EBITDA growth was lowered from about 10% to roughly 6%, and adjusted net income is now expected to decrease by around 2% instead of growing by the previously anticipated 4% to 5%. Furthermore, a previously announced national price increase for the Black Card membership tier has been temporarily halted while the company conducts a thorough review of its pricing strategy.
Keating expressed confidence that despite resetting near-term expectations, these strategic adjustments are poised to pave the way for improved top and bottom-line performance in 2027. Regarding earnings, adjusted EPS reached 74 cents, comfortably exceeding the average analyst estimate of 63 cents. Looking forward, the company has lowered its full-year adjusted EPS target to $3.19, contrasting with analysts' models of $3.38 and the prior guidance range of $3.35 to $3.38. The company also repurchased 613,725 shares of Class A common stock, totaling $50 million, during the quarter. As of March 31, the company's balance sheet showed $652 million in cash and marketable securities.
In summary, Planet Fitness's latest financial disclosure has led to a significant depreciation in its stock value. The company is actively addressing the challenges it faces, including refining its marketing approach, reassessing its pricing strategy, and adapting to competitive and economic landscapes. These measures are designed to strengthen its market position and improve financial results in the coming years, particularly by 2027, despite the current downward adjustments to its 2026 financial forecasts.
