Death of the Sports Gym

I hope for your sake that you don’t own a gym! — because one area that will certainly experience transformation into mainly smart products is fitness.

In the long term, this would be classified as a terrible investment, and I will tell you why.

The global digitally connected gym equipment market is projected to separate itself from the equipment of the past.

No more bench presses and barbells.

When I say smart fitness products, I am not just talking about Peloton (PTON) — though they are the trailblazer of the group. 

Rising technological advancements in the fitness and gym equipment market are happening at warp speed.

Rapid digitalization of the health and fitness industry along with the increased utilization of smart machines is making products better and more efficient.

There are advantages for the consumers like storage, monitoring, and analysis of their fitness performances and the ability to log these details for future references.

New platforms will start popping up that integrate gym equipment and sports equipment along with the training and coaching software.

My personal favorite is Tonal.

This machine is ingenious and uses its smart cable machine to perform strength training exercises.

It’s essentially a 24-inch iPad plastered on the wall with cables and is the Tesla of the smart gym industry with onscreen coaches that guide you through your workout.

Tonal’s AI automatically adjusts weight based on a user’s strength during workouts. Rather than physical weights, Tonal uses electromagnetic force to produce up to 200 pounds of resistance.

Artificial intelligence (AI) is there to track everything you do, analyze it, and decide what you're going to do next, so you end up getting a much better workout, in a shorter amount of time, in the convenience of your home.

With precise data measurement, Tonal can measure the quality of every single repetition, decide how much weight one should lift, and adjust weight in one-pound increments.

To visit their website, click here. (https://www.tonal.com/)

Treadmills are anticipated to hold the largest revenue shares of the market and dominate the market segment on the account of rising instances of cardiovascular diseases.

Strength training equipment is expected to rapidly increase sales by the consumers as well as the increasing inclination of regular fitness enthusiasts over bodybuilding and strength building.

As for specific smart gym stocks, Peloton (PTON) and Nautilus, Inc. (NLS) had huge run-ups in 2020 as business boomed during the health crisis.

These two stocks have come back to life during the “reopening trade.” They after going through a consolidation phase in 2021, but I do believe it is a good time to buy during a low patch.

Conversely, a gym franchise stock Planet Fitness, Inc. (PLNT) had a terrible 2020 because of the mandated closures but has followed up a bad year with a sensational year as in-person gym activity has reversed.

However, I believe the situation will be quite grim in the long haul for in-person gym aficionados, as Tonal proves, gyms will migrate into the confines of our homes simply because the technology now is TOO GOOD to justify getting in a car to drive 30 minutes to the gym, spending 15 minutes changing in the locker rooms, only to then start a workout.

Tonal can almost fit in a kitchen pantry — it’s an iPad with attached cables and nothing more than that.

Its compact nature will attract many gym enthusiasts and one doesn’t need to allocate a whole room for a home gym, even a hallway can suffice with Tonal.

Tonal can get better, but I specifically thought the programmed training dialogue from the A.I. trainers were cheesy.

But it’s good enough that it lays down the marker for in-home smart gyms to gain market share in the future, which is why I believe franchise gyms will be made redundant.

Unfortunately, Tonal is a private company and Lebron James just made a big investment to buy a piece of it.

Alternatively, a direct play that I like for the smart gym is Garmin Ltd. (GRMN) who produces a variety of smart fitness products and specializes in navigation. This stock is immune to the in-person or at-home gym question because their products will get used no matter what.

A second derivative play of the smart gym is the clothes that are needed to work out.

Although not a tech stock, workout apparel stock Lululemon Athletica Inc. (LULU) made hay last year and their stock has basically moved from the lower left to the upper right for the past 10 years with minimal volatility.

So does this mean the end of the sports gym as we know it?

I am not calling for the death of gyms yet, but we have definitely started down that path albeit it incrementally and once Tonal lookalike products become a little more affordable, kiss goodbye to many people going to the gym.