Interactive Strength Inc. (TRNR) shares jumped nearly 20% in Thursday's premarket trading after announcing it's buying Ergatta, a Brooklyn-based connected fitness company that's made a name for itself turning workouts into video games. The deal represents a major growth play for Interactive Strength, which has been looking to scale up its revenue after a tough year.

Ergatta isn't your typical rowing machine company. They've built their entire business model around gamified fitness content, creating a subscription service that people actually stick with. The proof is in the numbers: monthly net retention sits above 98%, which means almost nobody cancels, and many upgrade. That's the kind of sticky subscription business that cash-hungry companies dream about.

What Interactive Strength Is Actually Paying

The deal structure is clever, designed to protect Interactive Strength from overpaying if things don't work out. The maximum enterprise value clocks in at $19.5 million, but most of that is contingent on Ergatta hitting performance targets. If Ergatta achieves approximately $4.0 million in 2026 EBITDA, the multiple works out to less than 5.0x before any synergies. That's reasonable for a profitable, subscription-based business.

Here's how the money breaks down: The base transaction sits at $8.8 million, structured as $1.8 million cash at closing, $1.8 million in debt, and $5.3 million in equity that's locked up until May 2027. The sellers can't just flip the stock and walk away.

The earn-out structure gets more interesting. An additional $9.8 million becomes available if Ergatta hits that $4.0 million EBITDA target in 2026, payable as $3.5 million cash and $6.3 million in equity in May 2027. There's even another $1.0 million in equity on the table if 2027 EBITDA reaches approximately $4.8 million.

In total, 50% of the maximum enterprise value hinges on 2026 EBITDA performance, with another 5% tied to 2027 results. Interactive Strength is essentially saying: prove it works, and we'll pay you handsomely.

The Cash Flow Angle

Perhaps the most compelling detail: Interactive Strength expects to receive more cash flow from Ergatta during 2026 than the initial cash consideration it's paying at closing. That means this acquisition could essentially fund itself in year one, which is unusual and attractive.

The deal is expected to close by the first quarter of 2026, and management projects it will push 2026 pro forma revenue past $30 million. Ergatta itself should contribute over $10 million to that total.

Interactive Strength's Own Growth Story

Context matters here. Interactive Strength recently announced that fourth quarter 2025 revenue should exceed $4.5 million, representing roughly 100% year-over-year growth. Full-year 2025 pro forma revenue is expected to surpass $20 million, nearly quadruple the approximately $5 million it generated in 2024.

The company is clearly in aggressive growth mode, though the stock chart tells a more complicated story.

What the Charts Say

The technical picture is mixed at best. Shares are trading 10.42% below the 20-day simple moving average and a brutal 73.6% below the 100-day SMA, signaling a bearish longer-term trend. Over the past year, the stock has plummeted 96.70%, sitting much closer to 52-week lows than highs.

That said, there are glimmers of hope. The RSI stands at 31.70, which is neutral territory, while the MACD shows a value of -0.1805 against a signal line of -0.2134. With the MACD above the signal line, there's bullish momentum developing, even if the overall trend remains weak.

Key technical levels to watch:

• Resistance: 50 cents
• Support: 30 cents

The combination of neutral RSI and bullish MACD suggests the stock may have some underlying strength, but it's clearly facing significant headwinds. This acquisition could be exactly what Interactive Strength needs to turn sentiment around, assuming Ergatta delivers on those EBITDA targets.

Price Action: TRNR shares were up 19.78% at $0.49 during premarket trading on Thursday.