What Happened?
Shares of boutique fitness studio franchisor Xponential Fitness (NYSE: XPOF) fell 23.4% in the afternoon session after the company reported second-quarter results that missed expectations and lowered its full-year financial guidance. The boutique fitness franchisor reported second-quarter revenue of $76.21 million, which was flat year on year and missed analysts' expectations of $77.35 million. Its adjusted earnings per share of $0.26 also fell short of consensus estimates. The shortfall prompted a negative revision to its future outlook. Management lowered its full-year revenue guidance to a midpoint of $305 million, a 4.7% drop from its previous forecast. Similarly, its full-year adjusted EBITDA guidance was cut to a midpoint of $108.5 million, coming in well below Wall Street's projections. These downward revisions signaled to investors that the company anticipates challenges ahead, contributing to the negative reaction in its stock price.
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What Is The Market Telling Us
Xponential Fitness’s shares are extremely volatile and have had 48 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 previous big move we wrote about was about 23 hours ago when the stock dropped 4.1% on the news that the company announced an immediate change in its leadership. The company's board of directors appointed Mike Nuzzo as the new Chief Executive Officer, effective immediately, succeeding Mark King who resigned from his roles as CEO and director. Such an abrupt leadership transition often created uncertainty among investors regarding a company's strategic stability. This management shake-up also coincided with the day the company had scheduled its second-quarter financial results announcement.
Xponential Fitness is down 49.7% since the beginning of the year, and at $7.02 per share, it is trading 62% 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 $573.06.
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