During coronavirus, many fitness companies’ stocks have skyrocketed as investors bet on companies that could potentially profit during the pandemic and consumers sought out different ways to stay healthy.

Peloton, seen by many investors as the star of the coronavirus fitness craze, has seen its stock more than tripled since the start of the pandemic from $25.79 a share to $87.70 as of market close Friday. Lululemon’s stocks have also increased steadily throughout the pandemic before falling in the last month. They closed at $294.76 Friday, a 104% increase from its Mar. 18 price.  Bucking the trend of gym bankruptcies and closures during the pandemic, Planet Fitness’ stock went up 58.52% during this period and closed at $57.39 Friday. All three companies’ shares have outperformed that of the S&P 500 throughout the pandemic. 

“To a huge extent COVID and gym closures are driving people to reassess how they want to work out and how to build a resilient workout plan for them,” said Paul Golding, an analyst at Macquarie Group.  

As gyms shut down and mandatory quarantines forced people inside, brands that focused on at-home workouts, like Peloton and Lululemon, flourished. Meanwhile, a series of well-known gyms filed for bankruptcy, though one, Planet Fitness, has survived due in large part to a strong franchise business model that limited the liability of the company.  

Since the start of the pandemic, Peloton has seen its stock rise, outpacing even analysts’ predictions. 

What Peloton has done particularly well is that the company has been able to create a strong brand identity, culture, and community among its consumers, said Golding.

“It is a direct to consumer fitness product completely designed around inclusivity and community. And that is very different from large wholesale commercially distributed equipment companies and manufacturers,” said Golding. 

Peloton’s fastest-growing demographic is households earning $75,000 a year or less and 35 years old or younger.

Due to the high price of the bikes, customers see Peloton as a long-term investment.  

At the beginning of September Peloton reduced the price of its introductory bike but even with the reduction, Peloton’s cheapest bike still starts at $1895. 

Then there is the monthly membership cost for classes, one of Peloton’s main draws for fitness enthusiasts. 

Next, come the specialty shoes, the bike mat, the weights, the heart rate monitor and more. 

All these costs add up for consumers.

“I wouldn’t expect people to simply walk away from that after spending the money just because gyms are allowed to reopen,” said Golding. 

With strong sales, new products launched and increasing name recognition, Peloton continues to be a powerhouse in the fitness market and that is likely to continue into the new year. 

Lululemon, known mostly for its high-end athleisure wear, also did well throughout the pandemic with e-commerce sales growing 157% in the second quarter of 2020 despite having to temporarily close stores.

In a bid to expand their market into the at-home workout space and compete with Peloton, the company announced in June that it was going to be purchasing Mirror, a tech-enabled mirror that allows customers to take part in live classes from the comfort of their home. 

Morgan Stanley raised their target price for the stock from $306 to $320 in a note on Sept. 11 due to the company’s “strong performance amidst COVID-19, compelling long-term growth opportunities, and overall positioning (athletic/leisure, eCommerce).”

As of Friday, the stock closed at slightly above $294 and is likely to increase as consumers gear up for the holiday season. 

After the pandemic, the fitness landscape will look very different. 

Many gyms have not been able to survive the shutdown. 

Gold’s Gym filed for bankruptcy in May, 24 Hour Fitness filed for bankruptcy in June,  Town Sports International, the parent company of New York Sports Clubs and Boston Sports Clubs, filed for bankruptcy Sept. 14 and even Modell Sporting shuttered its doors at the start of the pandemic in March. 

However, some gyms like Planet Fitness, a low-cost gym, have been able to survive. 

Alex Maroccia, an Equity Research Analyst at Berenberg Capital Markets, equates this survival to the strength of Planet Fitness’ business model. 

95% of Planet Fitness gyms are franchised owned, which means the risk and overhead costs fall on the owners and investors, not on the company. 

The company was also able to maintain a relatively high membership retention rate and many of the gyms were only closed for a short time. 

“Planet Fitness model is focused around signing up a lot of people,” said Maroccia. “And maybe many of those people aren’t even going to go to the gym and so you’ve got this massive base of numbers that are paying every single month $10 or $23 a month dues.”

Out of Planet Fitness more than 2000 locations, 1800 are currently open and the company has plans to expand to 4000 stores in the coming years. 

This model is easy to understand and it’s what draws many investors to buy stock in fitness companies. 

“I’m willing to invest in any industry that I can wrap my head around. Fitness companies tend to be relatively simplistic business models to where it’s easy to understand how they make their money and how the business operates,” said Matt McKnight, a 29-year-old part-time trader from Tennessee who has at one time or another owned stocks in both Planet Fitness and Peloton. 

Once the country has fully opened up, Planet Fitness will have a lot less competition from other gyms that did not survive the pandemic.