The stock price of Beachbody Co. Inc. went up by nearly 11% late last month as it went through a stock split of 1-to-50.
Still, the rise in share price was short lived for the El Segundo company, also known as BODi for Beachbody on Demand Interactive.
The share price increased from a close of $7.50 on Nov. 21 to a close of $8.30 on Nov. 22, the day the stock split took effect. It then rose to a close of $10.01 on Dec. 4 before dropping to a close of $9.40 on Dec. 5. The stock closed at $11.99 on Dec. 7.
The share price had also dropped by 6% when Beachbody released its third quarter earnings.
On Nov. 7, the company reported after the market closed a net loss of $32.7 million (-11 cents a share) for the quarter ending Sept. 30, only slightly less than the net loss of $33.9 million (-11 cents) in the same period of the previous year. Revenue dropped about 23% from the third quarter of the prior year to $128 million.
Beachbody was cofounded in 1998 by Carl Daikeler and Jon Congdon as a distributor of home exercise DVDs. Since then, the company has gone digital with workouts and diet products. It went public in January 2021 in a deal valued at $2.9 billion, with a revenue forecast of $1 billion.
Mark Goldston, the first ever executive chairman of Beachbody, said in a conference call with an analyst to discuss third quarter earnings that the company’s turnaround plan was progressing.
“In the coming months, you should expect to see additional positive and purposeful changes taking place in the company,” Goldston said.
As part of that turnaround plan, the company will be aggressively pursuing ways to win back some of the 14 million people who are either former subscribers or qualified leads who were added to its database since 2016, Goldston added.
“As a result of the $165 million in expected cost savings, along with the key elements of the turnaround plan…we believe there’s a clear path to becoming cash flow positive, which would indeed be a milestone, for the turnaround effort at BODi,” Goldston said.
Growth plans
Jonathan R. Komp, a senior research analyst with Baird Equity Research in Milwaukee, said in a research note from Nov. 8 that Beachbody continues to pursue a number of efforts to return to growth.
These efforts include the addition of Brendon Burchard as chief growth officer and a performance advisor, optimizing its media spend, introducing a new free preview tier with 120 sample videos and improving focus on selling via Amazon.com Inc.
Burchard is also founder and chief executive of Napa-based GrowthDay, a subscription-based “self-improvement” app. Select content from Burchard and GrowthDay were made available to the BODi network last month.
And while he is optimistic about the potential for Goldston to help drive transformation of the business, he remains concerned about the near-term financial direction of the company especially given prospects for sequentially lower digital revenue and gross margin even after instituting a sizable price increase via the transition to BODi-only subscriptions, especially amid a challenging economic environment, Komp said in the note.
“Bigger picture, we believe the sizable industry opportunity and potentially higher profitability of Beachbody’s high subscription revenue, rising mix of digital and connected fitness revenue, and remaining growth potential for the core business can attract greater investor interest,” Komp added. “However, in the near-term, we think sentiment could remain pressured until Beachbody demonstrates ability to stabilize revenue trends and drive improved profitability/cash flow, and at this stage we are not assuming potential strategic alternatives (relative to remaining a public company) as part of our investment thesis.”
