Shares of Xponential Fitness (NYSE:XPOF) are plunging on Tuesday, with XPOF stock down about 40% on the session. It’s the stock’s largest one-day decline on record, and it’s happening on record volume as well.
The stock is cratering after short-seller Fuzzy Panda published a new report. The company called Xponential Fitness an “Abusive Franchisor” and a “House of Cards.”
At 8:45 a.m. Eastern, the company tweeted a scathing take on Xponential Fitness, along with a link to its report.
Fuzzy Panda, which has more than 18,000 followers on Twitter, is a self-described short-only fund. It’s aimed at “Exposing Stock Promotions, Frauds” and says, “BK’s is what we do best.”
According to Reuters:
“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.”
What’s Next for XPOF Stock Now?
Today’s decline has dealt a devastating blow to XPOF stock. Shares are not bouncing much from the session low, while the stock hit its lowest level since August 2022. The stock had a short interest of roughly 18.5% coming into the day, although that figure is sure to change with today’s plunge.
As of Monday’s close, shares were down almost 14% after declining in six of the prior seven sessions. From their 2023 high, XPOF stock was down about 25%. That figure has grown considerably — to roughly 55% — with today’s fall.
Reportedly, “Raymond James is set to host a conference call at 4pm with the XPOF CEO Anthony Geisler and the company’s CFO to address the short report, according to traders.”
While it’s unclear how the situation will develop for XPOF stock, investors can bet on volatility. Just to get back to Monday’s low (and thus, fill today’s gap), shares need to rally more than 60%. Additionally, it would take a more than 27% decline for the stock to hit new 52-week lows. The headlines will continue to surface, especially once management responds.
Now sporting a market capitalization of less than $1 billion, today’s decline is a painful blow to shareholders. Worse, the stock’s decline from the May 1 high wasn’t just the year-to-date high but also the all-time high.
In other words, things were going pretty well for XPOF stock just two months ago.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
