What Happened:
Shares of boutique fitness studio franchisor Xponential Fitness (NYSE:XPOF) jumped 25.1% in the morning session after the company announced that its Board of Directors has unanimously appointed Mark King as Chief Executive Officer effective June 17, 2024. Mr. King will also join the Company’s Board of Directors. Following the announcement, Brenda Morris will cease serving as Interim CEO but will continue to serve as a member of the Company’s Board of Directors.
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.
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What is the market telling us:
Xponential Fitness’s shares are quite 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 4 months ago, when the stock 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 12.3% since the beginning of the year, but at $14.19 per share it is still trading 47.2% below its 52-week high of $26.85 from June 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 $1,159.
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