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Sweat equity pays off on Wall Street

Tuesday, August 11, 2015 - 01:19

Some of the most promising IPOs have been, and will be, in the health and wellness space. Bobbi Rebell reports.

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Sweat plus equity has been a winning formula on Wall Street recently. FitBit shares soared on their first day of trading, and continue to climb higher, despite a sky high valuation and new competition. Planet Fitness had a rockier start after pricing at the top of its range, the stock moved lower right out of the gate, but soon recovered. The low-priced gym chain is now hitting its stride and trading above it's offering price of $16. That's more than a monthly membership- which can run just $10. It costs more than three times that to spin at boutique chain SoulCycle. The company recently filed to go public, but didn't put a date on the offering. But the pricey entry fee is exactly what is getting investors pumped up for the deal. Renaissance Capital's Kathy Smith: (SOUNDBITE) KATHLEEN SMITH, PRINCIPAL, RENAISSANCE CAPITAL (ENGLISH) SAYING: "It's about a dollar a minute to ride a SoulCycle, but it is a very popular ride. It's like riding in a nightclub, and the company has some amazing unit economics. I think, that is what will attract investors. It has about $4 million in sales per unit and very high operating margins, so we think that is a pretty good formula for attention by investors." The risk according to Smith? Like all fitness trends, cycling could be just a fad. She is also concerned about the lofty prices outside wealthy urban areas.

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Sweat equity pays off on Wall Street

Tuesday, August 11, 2015 - 01:19