By Christiana Sciaudone
Investing.com-- Beachbody jumped more than 7% in its trading debut today, proving that at-home fitness isn’t stuck in the days of the pandemic.
The fitness and nutrition company went public through a reverse merger with special purpose acquisition company Forest Road Acquisition Corp., and Myx Fitness Holdings, a Peloton (NASDAQ:PTON) rival. Like the popular maker of stationary bikes and streaming exercise videos, Beachbody is aiming to grow its own at-home audience of wellness enthusiasts even though people are free to return to gyms.
"Once you get a taste of that convenience, you don't go back," founder and CEO Carl Daikeler said in a phone interview today. "This is the same company today that we started 22 years ago, it's just on a bigger stage but the objective has literally been to use content and pull no punches in terms of what it takes to get results to help people get healthy and fit at home."
Daikeler added: "What 2020 did was provide a catalyst for the premise all along."
Forest's trust account totaled about $300 million, and institutional investors including Fidelity Management & Research and Fertitta Capital committed to a private placement of $225 million to purchase Class A shares of the combined company. Beachbody is expected to have over $420 million of unrestricted cash on the balance sheet, and the transaction implies a pro forma enterprise value of approximately $2.9 billion, or two times 2022 estimated revenue, according to a February statement.
"Because we've never had access to this kind of capital, we get to take our marketing to a new level," Daikeler said. Beachbody will also use the funds to expand internationally -- they are already in France and the U.K. -- initially looking at Western Europe. While it won't be a costly expansion, it will likely be complex in coming up with nutrition plans that cater to the tastes of each market, among other challenges.
Mergers and acquisitions are also on the menu, though the focus at the moment is on offering MYX bikes to the 3.2 million total digital and nutritional subscriptions already out there.
"That's a business that we've got to maximize, then we can look at the other options," Daimler (OTC:DDAIF) said.
In the meantime, the company's focused on its newest offering, Beachbody on demand interactive, a live stream workout that will stream from six to eight hours a day that will allow up to 100 subscribers to be in the background with the instructor who can provide live feedback.
For the three months ended in March, revenue for Beachbody's nutrition program outstripped that from digital subscriptions, with $131 million coming in versus $95 million, though digital revenue soared 52% while nutrition revenue rose 23% from a year earlier, according to a company filing. MYX, meanwhile, sold more than 27,000 bikes in its first year of operation. Its price point of $1,299 is far below the cheapest Peloton bike, valued at $1,895.
Speaking of which, Daikeler's not afraid of the competition.
"We're not fighting over the last few people who haven't made a choice. It's far more white space," he said. That said, while Peloton's prices limit its audience, "Beachbody has made its business by serving the mass market."