CNBC Fast Money tonight...Carter Worth's 2 short ideas
- Thread starter syswizard
- Start date
Planet Fitness. And it dropped $4 on his comment.
Don't touch it short yet. I've been watching it for awhile.
I'll let you know when.
Most of their top line comes from franchise fee's. Without looking, I think they only own a few 100 of the 1500 gyms.
Their $12/month is a good deal, and I think there are more premium packages. One ET'r here (Capt Obv) has mentioned he likes it.
I think the model works well in tier 1 or 2 cities, but I question how well the franchisee's will do in smaller towns once the initial flock of new members slows. The upper teir cities are all built out now so growth has to come from smaller metro areas.
They have high overhead. Rent, taxes, lights, 24 hr staff/instructors.... I mean they need to keep a lot of new members coming through those doors at that price to maintain positive cash-flow. I wouldn't franchise one, but that's just me.
At 12.5X sales, 18% net margin, 1B debt, $1.70/share FCF, and a forward PE near 55.... its definitely gotten way ahead of itself. Cramer has had no small part in that, he pumps it all the time.
The good thing is the short interest up till now was relatively light.
The bad thing is Carter Worth just put it on a lot of retail radars. The more shorts that pile on now, the higher it will go. When it does correct however, it will be a nice gap down. At least 10%. But one could get slaughtered waiting. Good stuff though.