What Happened?
Shares of boutique fitness studio franchisor Xponential Fitness (NYSE:XPOF) fell 38.4% in the morning session after 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.
Profits 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.
The shares closed the day at $7.46, down 38.8% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Xponential Fitness? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Xponential Fitness’s shares are extremely volatile and have had 41 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 9 months ago when the stock gained 25.1% on the news that the company announced that its Board of Directors unanimously appointed Mark King as Chief Executive Officer effective June 17, 2024. Following the announcement, Brenda Morris ceased serving as Interim CEO. Most recently, Mr. King served as CEO of Taco Bell, where he achieved positive same-store sales growth in each quarter but one while also opening more than 1,400 new franchise locations.
Xponential Fitness is down 47% since the beginning of the year, and at $7.40 per share, it is trading 59.9% 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 $604.08.
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