Stifel says ‘market likely overreacting’ to Planet Fitness social media backlash

Stifel analyst Chris O’Cull believes shares have pulled back over concerns that calls to boycott Planet Fitness gyms, in reaction to a recent locker room incident, will result in significant membership cancellations. The company has defended its policies to date, but the social media comments have intensified. It will be important for the company to gain control of the narrative quickly, the firm says. Fortunately, social media comments have a short shelf life when it comes to search, whereas news stories last longer, so having positive earned media highlighting the brand’s “judgement free” positioning can prevent search results with a shorter shelf life from continuing to impact the brand’s reputation, Stifel adds. Fortunately, the firm believes Q1 joins are better-than-expected, and the market is likely overreacting to this situation. Stifel has a Buy rating on the shares.