Life Time Stock Up 56%, Driven by Pickleball Says Wallstreet

Right now, pickleball is big money, and according to Bank of America (BoA), you'd be smart to invest in more than just a new paddle.

BoA analyst Alexander Perry says the explosive rise of pickleball has positioned Life Time Group Holdings ("Life Time") as a major beneficiary.

With a 56% stock increase this year and an ambitious expansion plan to grow its pickleball courts, Life Time is poised to capitalize on the sport’s booming popularity. Perry reiterated a buy rating for the fitness giant, noting its strategic investments in pickleball are driving membership growth and financial success.

Here's a summary of the key points:

Life Time's Pickleball Strategy

Life Time Group Holdings has positioned itself as the largest provider of indoor pickleball in the United States, capitalizing on the sport's rapid growth. The company has:

• Increased its number of pickleball courts by 43% since Q1 2023
• Expanded pickleball sessions by 71% in the same period
• Installed over 700 permanent pickleball courts across its facilities
• Offered pickleball at 75% of its clubs
• Plans to expand to 1,000 courts by the end of 2025

Financial Impact and Analyst Outlook

• Bank of America analyst Alexander Perry reiterated a buy rating on Life Time stock
• Perry raised the price target to $30, implying a potential 27% increase
• Life Time's stock has already advanced more than 56% this year
• The company posted strong Q2 results and raised its financial guidance for the year
• Pickleball has contributed up to 7% of Life Time's membership dues

Pickleball's Growth

• Total pickleball players in the U.S. increased by 53% to 13.6 million in 2023
• The sport continues to be the fastest-growing in the United States

Additional Initiatives

• Life Time has invested up to $100 million in pickleball
• The company created a stronger and faster ball specifically for pickleball
• Life Time hosts professional tournaments for Major League Pickleball and the Professional Pickleball Association

Market Position

Analyst Alexander Perry believes Life Time is best positioned among leisure companies to benefit from pickleball's popularity, citing strong membership demand and the potential for further price increases.

Pickleball's Impact on Life Time's Revenue

Life Time Group Holdings' investment in pickleball has had a significant positive impact on the company's overall revenue and growth strategy:

Revenue Impact

• Pickleball has contributed between 6-7% of Life Time's total membership dues
• As of Q2 2024, the company's revenue grew by 17.97% over the last twelve months, demonstrating its ability to increase earnings

Expansion of Pickleball Offerings

• Life Time has increased its number of pickleball courts by 43% since Q1 2023
• Pickleball sessions have grown by 71% in the same period
• The company currently offers pickleball at 75% of its clubs (131 locations)
• Life Time plans to expand from over 700 permanent pickleball courts to 1,000 courts by the end of 2025

Membership Growth

• Approximately 26% of Life Time's clubs operate with waitlists due to membership demand exceeding capacity
• This high demand allows the company to potentially increase membership prices further

By leveraging the pickleball trend, Life Time has not only boosted its direct revenue from the sport but also increased overall membership attraction and retention, contributing to its broader financial growth and market position in the fitness industry.

Resources used for this article:
[1] Front Office Sports
[2] Seeking Alpha