Jun 9, 2022
[7 min Read]
The Beachbody Company, Inc. operates as a health and wellness platform that provides fitness, nutrition, and stress-reducing programs. It operates in two segments, Beachbody and Other. The company operates Beachbody on Demand, a digital subscription platform that provides access to a library of live and on-demand fitness and nutrition content; and Openfit, a digital streaming platform that provides digital fitness and wellness resource. It also offers nutritional products, such as Shakeology.
Overall, BODY is in a good business for a couple of reasons. Firstly, the global weight management market size is expected to reach USD 298.6 billion by 2030, which would represent an impressive CAGR of 9.7%. Furthermore, 63% of U.S. adults plan to change up their diet in 2022, as a result of their pandemic weight gain.
In order to undergo a comparable analysis (to determine BODY stocks value), we need to first outline who BODY's competitors are.
These competitors need to be publicly listed, have valid financial metrics/multiples, operate in a similar manner to BODY, and have a market cap similar to BODY (if possible).
By keeping this in mind, I found the following list of companies to be some of BODY stocks closest competitors:
BODY has disclosed a $1.9M share purchase by their CEO (Carl Daikeler). Daikeler acquired 970,226 shares of the firm's Class A common stock between the $1.62 - $2.19 price range through various purchases.
Seeing insiders buying stock is a very bullish sign for investors. This is especially true with high ranking officers (notably CEO's and CFO's). Furthermore, Daikeler has been on a purchasing spree between May 17th to May 31st, purchasing a total of 2,864,679 shares of the BODY Stock for $5,003,290. As a result of this, Mr. Daikeler has an average cost basis of arounf $1.75 per share. Mr. Daikeler's average cost is currently 12.9% higher than the current BODY stock price of $1.55/share. This is important for BODY Stock investors as it shows Daikeler's conviction that the stock will reach higher levels than $1.75/share. Furthemore, it could be said that Mr. Daikeler has conviction that the BODY Stock will surpass $2.20/share, as this was the last price he purchased the BODY stock at. If this was the case, the BODY stock would have an upside potential of 41.9%, which is very attractive.
Overall, in 2021, the BODY earnings report was not very good as their most important figures (EPS, EBITDA, and Net Income) all fell by large amounts. Although there was some revenue growth, this small positive is highly outweighed by the decreases in AI's EPS, EBITDA, and Net Incomes.
Although the 2021 BODY earnings report was poor, there is still hope that they could have turned things around in the more recent (quarterly) earnings reports. So let's have a look...
It seems as though BODY had a great financial performance (due to EPS $0.24) as many of their financial metrics grew, most notably their EPS, as well as their net income (by $72.4M), and their EBITDA by $74.5M.
However, BODY stock missed their EPS estimate by $0.11 (or -84.62%), as they reported an EPS of $-0.24 for the quarter (compared to their estimated EPS of $-0.13).
Overall, BODY had an okay earnings for Q1 2022, as it would have been good, just looking at their quarter over quarter growth. However, we now know that they missed their EPS estimate by a large amount which offsets the financial progress that BODY made over the past quarter.
As part of their Q1 2022 earnings release, BODY stated that they currently have 305.75M Shares Outstanding (weighted average), which is up 0 shares (from 305.75M shares outstanding in Q4 2021). Furthermore, BODY stock has up to 0 of shares that they can issue (thereby diluting BODY's stock). The fact that both of these figures is great for investors as we do not to have to worry about BODY shares getting excessively diluted, thus, losing money and equity in the company.
Here is the current spread of BODY stock ratings. In total there are 16 BODY stock ratings, which fall in the following categories.
Analyst Ratings have provided relatively strong indicators of future price movement, which is why they are used to determine if BODY stock is a buy or sell. As you can see the analysts are split (for the most part) between wither buying or holding the BODY stock. Usually these analysts are very bullish, so the fact that there are this many "hold" ratings is a bit worrying.
Overall, we can arrive at one BODY Price Forecast by averaging the results from the 2 comparable analyses. By doing this we can determine that the BODY stock is currently overvalued, and needs to experience a decrease in price of 9.85% in order to be at fair value.
My BODY stock forecast implies that BODY is overvalued and needs to experience a price decrease of 9.85% in order to be at fair value. Furthermore, BODY's earnings reports have all been rather poor as their Net income and EPS have both been negative in the yearly and quarterly reports, as well as their recent earnings miss. However, we know that BODY's CEO (Carl Daikeler) thinks that their stock is undervalued, as he has been heavily accumulating BODY shares over the past month. Just to make things a bit more confusing, analysts have a generally neutral stance on the future of BODY.
I think the fact that BODY's earnings being subpar, and the comparable analysis determining that the BODY stock is overvalued is a bit more convincing than Mr. Daikeler's bullish stance (and analysts neutral stance). As a result of this I would want to wait until the BODY stock reached the fair value price (-9.85% or $1.40) before deciding to purchase the BODY stock. The reason I would wait rather than being bearish is the fact that their CEO is buying heavily, and the industry outlook is rather optimistic (as discussed at the start of this analysis).
Note: This position will be posted as "Bearish" however, that is what I have to do in order to get this out.