Senate Axes Gym Tax And Equipment Relief: Fitness Plays Crater — PTON, XPOF Lead The Sell-Off, Planet Fitness Rallies - Peloton Interactive (NASDAQ:PTON), Planet Fitness (NYSE:PLNT)

Fitness stocks witnessed a sharp sell-off this week, after a provision that would allow Americans to use pre-tax dollars from Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) to pay for gym memberships and fitness equipment was excluded from the Senate’s budget reconciliation bill.

What Happened: Shares of Peloton Interactive Inc. PTON and Xponential Fitness Inc. XPOF fell by 11.65% and 6.67%, respectively, on Tuesday.

This was in response to the PHIT Act (Personal Health Investment Today) being excluded from the Senate’s version of the bill, according to a report by TipRanks. The act was expected to provide substantial tailwinds for the health and fitness industries.

The bill would have made Peloton’s products more affordable to customers, alongside Xponential’s services and memberships, by offering customers a potential tax offset. Thus, its exclusion was seen by the markets as a setback for the industry.

However, not all fitness stocks were hit, with Planet Fitness Inc. PLNT, which despite having witnessed a decline on Tuesday, has since mounted a decent recovery, and is up 4.4% so far this week.

This can be attributed to a bullish analyst note leading up to it, with a Canaccord Genuity analyst raising their target on the stock to $126, representing a 17% upside from current levels.

The analysts cited its resilient, value-based gym model, along with an asset-light franchise strategy that is currently seeing strong membership trends without any FSA-related tailwinds, reported by Investing.

Why It Matters: Three weeks ago, it was estimated that President Donald Trump’s “One Big, Beautiful Bill” would potentially add 20 million more Americans to the 60 million who are already covered by HSAs, thus creating significant tailwinds for the industry.

This was, however, met with criticism since experts believed it would mostly be beneficial to people with higher income, and was projected to cost $180.8 billion in lost revenues between 2025 and 2034.

During its first quarter results last month, Planet Fitness missed Wall Street estimates, with $276.7 million in revenue, up 11.5% year-over-year, with a profit of $0.59 per share, against a consensus of $0.62 per share.

The company, however, touted its strong growth amid an increasingly turbulent global macro backdrop, saying that its exposure to the trade and tariff policies was limited.

Price Action: Shares of Planet Fitness were up 4.89% on Wednesday, closing at $107.69, and it is flat in after-hours trading.

Planet Fitness has a favorable price trend in the short, medium, and long term, but how does it compare with competitors such as Peloton and Xponential Fitness? Click here to find out more.

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