![Xponential Fitness sees shares collapse after CEO is ousted 1 Xponential Fitness sees shares collapse after CEO is ousted](https://www.trendfeedworld.com/wp-content/uploads/2024/05/Xponential-Fitness-sees-shares-collapse-after-CEO-is-ousted.jpg)
Anthony Geisler, CEO of Xponential Fitness, on the New York Stock Exchange.
Source: NYSE
Shares of Exponential fitnessthe parent company of fitness studios CycleBar and Pure Barre, bounced around in trading Monday after the company announced late Friday that CEO Anthony Geisler would be suspended indefinitely and become an inactive member of the board of directors.
The company's shares have plunged nearly 30% since Friday, leaving its market capitalization below $500,000. Shares initially fell another 10% on Monday morning, but have since bounced back to positive territory.
Brenda Morris, board member since 2019, will act as interim CEO.
Exponential fitnesswhich owns more than 3,000 boutique fitness and wellness studios worldwide, also said it was notified last week of an investigation by the U.S. Attorney's Office for the Central District of California.
“In terms of the investigation, it appears that the information requested is largely consistent with that of the previously disclosed SEC investigation,” said Korinne Wolfmeyer, an analyst at Piper Sandler. Piper Sandler maintains a hold rating on Xponential Fitness shares, but lowered its price target to $9 from $12. As of Monday, the shares were trading for about $9 each.
Xponential Fitness leadership had previously disclosed an SEC investigation in December, alleging that the company provided false and/or misleading information to investors, including unit count and franchise closing figures. Shareholders filed a class action lawsuit in February over the allegations against the company seeking financial damages.
“The company intends to continue to cooperate with the SEC and intends to cooperate with the USAO,” Xponential Fitness said in a press release announcement of the management changes.
Courtesy: Xponential Fitness
Xponential Fitness also reaffirmed its full-year 2024 guidance previously announced on May 2.
The company did not respond to CNBC's request for comment on the investigation.
“In our opinion, we are pleased that the financial goals are still intact, and Ms. Morris appears to be a suitable leader for the interim role,” Wolfmeyer said.
However, Wolfmeyer noted that the company remains cautious.
“We are struggling to get behind this name even after Friday's withdrawal,” she added.