Digital Retail And Health Trends Will Unlock New Demand

Key Takeaways

• Shift from MLM to omnichannel retail and digital integration positions Beachbody for strong revenue growth and high customer engagement across brands and channels.
  
• Operational efficiencies and tech-driven personalization boost margins, customer retention, and recurring digital subscription revenue, outpacing market expectations.
  
• Declining digital subscribers, disrupted nutrition sales, intense competition, and rising costs threaten Beachbody's revenue, margins, and ability to execute its turnaround strategy.

Catalysts

Operates as a fitness and nutrition company in the United States, Canada, the United Kingdom, and France.

• While analysts broadly agree that Beachbody's pivot from MLM to omnichannel retail will expand distribution, the sheer magnitude of the shift-unlocking entirely new retail and grocery channels for billion-dollar brands like Shakeology, P90X, and INSANITY for the first time ever-could trigger revenue growth far beyond current forecasts, especially as cross-marketing and digital/physical integration drive higher customer acquisition and ARPU.
  
• Analyst consensus highlights margin improvements from operational restructuring, but the ongoing optimization-dropping revenue breakeven by more than 700 million dollars and reducing selling/marketing expenses from over 50 percent to near 35 percent-creates the potential for sustained net margin expansion and positive free cash flow, positioning Beachbody for accelerated earnings growth at a scale the market is underestimating.
  
• The convergence of demographic shifts and global health trends significantly benefits Beachbody's digital-first model, as its multi-generational customer appeal-backed by fresh content, community-driven engagement, and refer-a-friend platforms-poises it to capitalize on rising long-term demand, supporting recurring digital subscription revenue and lifetime customer value uplift.
  
• The company's increasingly tech-enabled platform, including upcoming Shopify integration and new AI-driven personalization features, enables enhanced customer retention, seamless digital-commerce experiences, and integration with connected health/wellness ecosystems, setting the stage for stickier engagement, higher subscription renewal rates, and lower churn.
  
• Unique cross-channel, cross-product synergies-such as retail packaging offering instant access to digital programs and innovative use of gamified referral systems-are likely to radically reduce customer acquisition costs and expand the user base well ahead of competitors, driving scale advantages that will be reflected in both top-line growth and long-term margin leverage.

Beachbody Company Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Beachbody Company compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Beachbody Company's revenue will decrease by 17.2% annually over the next 3 years.
• Even the bullish analysts are not forecasting that Beachbody Company will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Beachbody Company's profit margin will increase from -17.9% to the average US Consumer Services industry of 11.7% in 3 years.
• If Beachbody Company's profit margin were to converge on the industry average, you could expect earnings to reach $21.6 million (and earnings per share of $3.08) by about August 2028, up from $-58.2 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 5.4x on those 2028 earnings, up from -0.6x today. This future PE is lower than the current PE for the US Consumer Services industry at 19.9x.
• Analysts expect the number of shares outstanding to grow by 2.07% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.39%, as per the Simply Wall St company report.

Beachbody Company Future Earnings Per Share Growth

Risks

• The secular trend of consumers returning to in-person and experiential fitness options presents a structural headwind, as Beachbody's digital subscriber base continues to decline, with digital subscribers reported down 7.8 percent sequentially and 18.2 percent year-over-year, indicating pressure on revenue and raising concerns for future top-line growth.
  
• The widespread availability of free and ad-supported fitness content on social media and streaming platforms undermines Beachbody's ability to retain subscribers and charge premium prices for digital content, contributing to a 32.5 percent year-over-year decrease in digital revenue and posing ongoing risks to both revenue and gross margin.
  
• The transition from a multilevel marketing (MLM) model to omnichannel retail has contributed to significant disruptions in Beachbody's nutrition segment, shown by a 51.8 percent year-over-year decrease in nutrition revenue and a 52.1 percent drop in nutrition subscriptions, suggesting ongoing revenue and earnings volatility as traditional sales channels are dismantled before retail traction is established.
  
• Market saturation in digital fitness and wellness, combined with brand stagnation, threatens competitive differentiation, illustrated by ongoing sequential and year-over-year revenue declines, creating downward pressure on market share, customer lifetime value, and the potential need for increased marketing spend which could compress future net margins.
  
• As Beachbody faces rising costs for technology, talent, and content licensing, coupled with chronic underinvestment and delayed innovation relative to competitors, the company risks eroding its customer base in the long term, which could impact earnings and prevent realization of the anticipated benefits from its turnaround and new retail strategy.

Valuation

• The assumed bullish price target for Beachbody Company is $13.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Beachbody Company's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $13.0, and the most bearish reporting a price target of just $4.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $184.5 million, earnings will come to $21.6 million, and it would be trading on a PE ratio of 5.4x, assuming you use a discount rate of 8.4%.
• Given the current share price of $5.32, the bullish analyst price target of $13.0 is 59.1% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.