Xponential plunges after short-seller alleges fitness chain mislead investors

Xponential Fitness

27/06/2023 16:24

June 27 (Reuters) - Shares of Xponential Fitness
 XPOF.N  slumped nearly 34% on Tuesday after short-seller Fuzzy
Panda Research alleged that the boutique gym chain had mislead
investors by "hiding" the losses of its brands and franchisees. 
    Fuzzy Panda, in a report made public on Tuesday, revealed
its short position on the company. It said more than half of
Xponential's studios did not make a positive financial return,
and eight out of 10 brands were losing money monthly, according
to its review of 64 franchise disclosure documents (FDD). 
    It also said that CEO Anthony Geisler had made "false
claims" that Xponential had never closed a store, but it
discovered that more than 30 stores had been closed permanently.
    Xponential Fitness did not immediately respond to a Reuters
request for comment on the report. 
    Shares of the company tumbled to a more than 10-month low of
$16.59 in morning trade. If current losses hold, the stock would
record its worst ever session.
    Fuzzy Panda said some franchisees told the short seller the
"losses were so bad that they sold their studios back to
Xponential for $1," adding it has found more than 100 franchises
for resale at a discount of over 75% to the initial cost. 
    Xponential has more than 2,700 fitness studios, including
Cyclebar and Club Pilates brands, according to its website.     

 (Reporting by Deborah Sophia in Bengaluru; Editing by Shinjini
Ganguli)
 ((DeborahMary.Sophia@thomsonreuters.com;))