What Happened?

Shares of boutique fitness studio franchisor Xponential Fitness (NYSE: XPOF) fell 18.6% in the morning session after Chief Executive Officer, Mark King, informed the Board of Directors that he intended to retire as the Company's CEO and Director due to health reasons. While he remained in office until the Board found his successor, his departure introduced uncertainty about the company's future leadership.

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What The Market Is Telling Us

Xponential Fitness’s shares are extremely volatile and have had 49 moves greater than 5% over the last year. But moves this big are rare even for Xponential Fitness and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 2 months ago when the stock dropped 38.4% on the news that the company reported weak fourth-quarter results: its full-year revenue and EBITDA guidance missed significantly. The standout detail was a 21% increase in system-wide sales across North America, driven by strong franchise growth and rising membership. However, total sales dropped 7% year over year, highlighting struggles in non-franchise revenue streams such as equipment and merchandise sales. Profitability also took a hit, with margins contracting significantly. This was largely due to a $46 million impairment charge related to goodwill and other assets. Combined with sluggish revenue growth, these factors led to a substantial earnings miss. Overall, this was a weaker quarter, as strong franchise sales and a revenue beat were overshadowed by a shrinking bottom line and cautious guidance.

Xponential Fitness is down 41.2% since the beginning of the year, and at $8.20 per share, it is trading 55.6% below its 52-week high of $18.47 from February 2025. Investors who bought $1,000 worth of Xponential Fitness’s shares at the IPO in July 2021 would now be looking at an investment worth $669.44.

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