On Wednesday, Canaccord Genuity maintained a Buy rating on Beachbody Company (NYSE:BODI) stock, with a steady price target of $13.00.
The fitness company announced significant operational changes aimed at accelerating its path to profitability, including a 33% reduction in corporate headcount and a transition from a multi-level marketing (MLM) commission structure to a single-level affiliate program.
These strategic adjustments are anticipated to reduce Beachbody’s revenue break-even point from approximately $430 million to under $225 million.
The company is also bolstering its direct-to-consumer (DTC) business, expanding its presence on Amazon (NASDAQ:), and focusing on sales through partnerships. Despite potential short-term sales volatility due to the MLM network changes, which might result in a temporary decline in sellers, the firm believes Beachbody’s new direction will lead to more consistent profitability in the long term.
Beachbody’s management has reaffirmed their third-quarter 2024 guidance, projecting revenues to be in the range of $97 million to $107 million, with adjusted EBITDA between $2 million and $6 million. However, they also expect a net loss of $9 million to $13 million for the same period.
The firm’s analysis suggests that while the transition away from the MLM channel may incur costs and affect growth in the short term, the investment in more rapidly expanding channels, such as digital, is a positive move for Beachbody’s future.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Beachbody Company’s financial situation and market performance. The company’s market capitalization stands at $37.35 million, reflecting its current position in the fitness industry. Despite the challenges highlighted in the article, Beachbody maintains impressive gross profit margins of 64.79% for the last twelve months as of Q2 2024, which aligns with the company’s focus on profitability.
However, the company’s recent performance has been concerning. InvestingPro data shows that Beachbody’s revenue declined by 19.61% in the last twelve months, with a quarterly revenue decline of 18.35% in Q2 2024. This data supports the article’s mention of potential short-term sales volatility due to the restructuring of the MLM network.
InvestingPro Tips indicate that Beachbody’s stock is currently trading near its 52-week low and has experienced significant price declines across various timeframes. The stock’s price has fallen by 66.55% over the past year, which may reflect investor concerns about the company’s transition and future prospects.
For investors seeking a more comprehensive analysis, InvestingPro offers 17 additional tips for Beachbody Company, providing a deeper understanding of the company’s financial health and market position.
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