Beachbody (BODY) has dropped below $10, the listing price of its SPAC predecessor, FRX. The stock fell 6.6 percent on Jul. 14 to close at about $8 and is now almost 60 percent below its peak. Why is BODY stock falling? Should you buy the dip now?
Beachbody, which operates in the fitness industry, sells exercise equipment and offers related content. In Jun. 2021, the company went public in a three-way SPAC merger that also involved Myx Fitness.
Why is Beachbody (BODY) stock falling?
Beachbody stock made its public debut on Jun. 28, gaining more than 6 percent on the first day of trading to close at about $13. BODY's decline to under $10 can be attributed to several factors.
Whereas the expanding COVID-19 vaccine rollout is bringing people out again, some investors are questioning the outlook of companies that benefited from people staying at home because of lockdowns. That might partly explain the selloff in many stay-at-home stocks, a category that includes at-home exercise companies such as Beachbody and its main competitor, Peloton. Like Beachbody, Peloton stock has fallen in 2021 after having a great 2020.
Beachbody and Peloton stocks have also fallen in response to The Wall Street Journal reporting that rival IFIT Health & Fitness is gearing up for an IPO. The possibility of another fitness stock coming to market might be causing some potential investors to hold off.
Will BODY stock recover?
After BODY stock falls to under $10, many investors see a limited downside. Beachbody shares rose about 2 percent in premarket trading on Jul. 15, a sign that some investors are moving to buy the dip. A rush to accumulate the stock should drive BODY back up.
Also, BODY stock's rising short interest may prompt Reddit’s WallStreetBets investors to launch a short squeeze, sending the stock soaring like GameStop and AMC.
Beachbody (BODY) stock's price prediction
Analyst's average price target for Beachbody stock is $13.83, which implies an upside of more than 70 percent. Their highest target for BODY is $16 and their lowest is $11, which the stock has dropped below.
Is BODY stock a good long-term investment?
With its broad range of fitness, nutritional products, and digital subscriptions, Beachbody is positioned for growth. Between 2020 and 2025, the company forecasts its revenue growing 30 percent compounded annually to reach $3.3 billion from $880 million. In 2021's first quarter, Beachbody’s revenue jumped more than 40 percent year-over-year to $243 million, representing annualized revenue of $970 million.
Through its digital subscription business, Beachbody seeks to become the Disney+ or Netflix of exercise content. The company has attracted more than 3.2 million subscribers, and its retention rate is about 96 percent.
Financially, Beachbody looks well grounded to pursue growth opportunities. The SPAC merger added more than $420 million in cash to Beachbody’s balance sheet, money that management plans to spend on future growth.