The SPAC craze has made another billionaire. This is the latest example of blank check companies that lead to new members of the three-comma club. Santa Monica-based Beachbody, an exercise-DVD and weight loss-shake-selling multilevel marketing company that has evolved into an online fitness brand, went public on Monday on the New York Stock Exchange. The merger was with Myx Fitness and Forest Road Acquisition Corp. This blank check company has ties to Shaquille Oleal, former NBA star and TikTok CEO Kevin Mayer. The 43% stake in Beachbody, which is worth $1.7 billion, means that the chairman and CEO of Beachbody, Carl Daikeler (who founded it in 1998), is now a billionaire.
The merger aims to make the new company a direct competitor for leading fitness brands like Peloton and Lululemon. This is done by combining Beachbody’s rapidly growing digital subscription business and library with live and on-demand classes and Myx’s touchscreen-equipped workout bike, which is a cheaper option to Peloton. Myx’s exercise bicycle is listed on its website at $1,299, while the lowest-priced Peloton package is $1,895.
Myx Fitness is relatively new and an unknown player in the world of exercise bikes. In 2020, it had just $30,000 in sales from its bikes. Reported a net loss in 2020 on sales of $864million. This is down from a $32million net profit of $756million in 2019.
“This is an important milestone in Beachbody’s mission to help more people achieve goals and live healthy, fulfilling lives,” Daikeler (57) said in a statement that announced the merger. “With this transaction, we will deploy capital for growth, add connected fitness equipment through the acquisition by Myx, and continue to create exciting in-home workout content.”
A spokesperson for Beachbody didn’t respond to a request for comment about Daikeler’s net worth.
Forbes published a 2018 article describing how Daikeler was born outside Philadelphia and graduated in 1986 from Ithaca College with an MBA in corporate organizational media. Daikeler then became a halftime producer at televised football matches. He quit his job in 1987 to make fitness infomercials. This business later developed into filmed workouts. In 1994, he cofounded TelAmerica Media, a workout video company. It sold 2 million copies of the hit video “Buns of Steel” before selling his stake and returning to the infomercial business. He launched Beachbody with Jon Congdon, his coworker and $500,000 from angel investors in 1998.
Forbes reported that he had learned that solving his problem, which he doesn’t like working out and eats like a second-grader, was a scalable opportunity. He told Forbes in 2018 when his share in the company was valued at $660 million.
P90X was the first Beachbody success. It was a three-month bootcamp that became a huge success. Former Speaker of the House Paul Ryan and Michelle Obama praised it. Congdon and Daikeler built the company into a multilevel marketing powerhouse with a data-ga track.
Daikeler made a risky move in 2015 by launching Beachbody on Demand. This service, which is similar to Netflix, offers the entire company’s workout videos for $99 per year. Although it was painful at first (the number of coaches dropped from 450,000 to 340,000 in 2016 and 2018), that strategy paid off in 2020 when the pandemic closed down gyms across the country. People turned to live-streamed fitness and workouts.
Congdon launched Openfit in early 2019 at $19 per month. Beachbody also owned it. This helped the company grow its paid digital subscriptions by 53%, to 2.6million, compared with 3 million for Peloton. Congdon owns approximately 6% of Beachbody, which is worth around $220 million at 9:45 ET. Beachbody has the opportunity to diversify beyond health food, supplements, and Shakeology drinks. In 2019, Beachbody’s overall revenue was two-thirds. However, Beachbody’s shake business was subject to legal scrutiny. In 2017, the company settled a $3.6million settlement with Santa Monica’s city attorney and made no health claims regarding its shakes. The company continues to invest in nutrition markets with celebrity-backed food plays: In December 2020, it purchased LeBron James’s sports nutrition company Ladder for $28 million.
Although Beachbody’s sales of $864 million last year were a slight improvement over the $756 millions in 2019, it still represents a significant drop in revenue from the $1 billion Beachbody claimed it had in 2017. Daikeler can hedge his bets with Myx Fitness’ merger, positioning Beachbody as an integrated home-fitness company that competes with the likes Peloton or fat, which is the parent company of NordicTrack and ProForm.
Simeon Siegel is a senior analyst at BMO Capital Markets. “Home fitness is opening up exercise as much as streaming did to the media world,” he says. Companies that can offer compelling products and compelling content will have a long road ahead.