Growth Stock Spitting Cash, page-18

Me? Nope. I'm referring to the acquisition of one location in Wagga. No mention of EBITDA for that acquisition. EBITDA is a bit misleading too, given the asset intensiveness of gyms. Depreciation was about 18% of revenue for Basic Fit last year, and about 25% of revenue for Planet Fitness (using only revenue for their owned stores not franchised). So VVA will buy these gyms and cash will look good initially but then they'll have to start replacing equipment. In a highly competitive industry if the product is cr@p people will switch.

Regarding Basic Fit and Planet Fitness, have you actually looked beyond the share price at the economics of these businesses? Basic Fit has $525m in PP&E on their balance sheet generating $400m in revenue. That is virtually all leasehold improvement and gym equipment – they have about $2m in land etc. So everything being equal, to generate $1 extra in revenue BF, who are one of the best performing businesses in the sector worldwide, have to invest $1.30 into fixed assets. That explains why PP has gone down the path of franchising. In order for VVA to get anywhere near BF or PP they are going to have to raise hundreds of millions in cash. Like I said, this charade will work as long as the music keeps playing and the share price supports an arbitrage between private and public ownership. But watch out when the punters discover that this isn't a tech company that "spews cash" and it's actually the opposite.