Why Xponential Fitness (XPOF) Shares Are Plunging Today

What Happened:

Shares of boutique fitness studio franchisor Xponential Fitness (NYSE:XPOF) fell 22.1% in the morning session after the company reported second-quarter earnings results. It significantly lowered its full-year revenue guidance, and its revenue and EPS fell short of Wall Street’s estimates. Overall, this was a bad quarter for Xponential Fitness.

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What is the market telling us:

Xponential Fitness’s shares are somewhat volatile and over the last year have had 40 moves greater than 5%. But moves this big are very rare even for Xponential Fitness and that is indicating to us that this news had a significant impact on the market’s perception of the business.

The biggest move we wrote about over the last year was 5 months ago, when the company gained 26.6% on the news that the company reported fourth-quarter results that blew past analysts’ revenue estimates, driven by better-than-expected equipment and merchandise sales to its franchisees.

On the other hand, its operating margin and EPS fell short of Wall Street’s projections as it produced less high-margin franchise revenue than expected. Looking ahead, its full-year 2024 revenue guidance was in line with estimates, while its EBITDA outlook of $138 million fell short. Overall, this was a decent quarter for Xponential Fitness.

Xponential Fitness is up 9.1% since the beginning of the year, but at $13.80 per share it is still trading 39.5% below its 52-week high of $22.79 from August 2023. 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 $1,127.

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