After CEO ousted and federal probe disclosed, Cyclebar, Pure Barre fitness studios parent company sees shares whipsaw.

• The CEO of Xponential Fitness, which owns Cyclebar and Pure Barre fitness studios, has been suspended indefinitely and an interim CEO has been appointed.
• The United States Attorney's Office is investigating Xponential.
• The company had previously disclosed an SEC investigation, which alleged that it provided false and/or misleading information to investors and franchise owners.

The stock price of the parent company of Cyclebar and Pure Barre fitness studios fluctuated on Monday following the announcement on Friday that CEO Anthony Geisler would be suspended indefinitely without a specific return date and would become an inactive member of the board.

Since Friday, the company's shares have fallen nearly 30%, causing its market cap to drop below $500,000. However, shares were initially down another 10% Monday morning before being rebounded into positive territory.

As of 2019, Brenda Morris has been a board member and will now be serving as interim CEO.

The U.S. Attorney's Office for the Central District of California launched an investigation into Xponential Fitness, which operates over 3,000 boutique fitness and wellness studios worldwide.

Piper Sandler analyst Korinne Wolfmeyer stated that the information requested in the current investigation is similar to that of the previously-disclosed SEC investigation. Piper Sandler has maintained a "hold" rating on Xponential Fitness stock, but has lowered its price target from $12 to $9. As of Monday, shares were trading for approximately $9 each.

In December, Xponential Fitness' leadership announced an SEC investigation, which accused the company of providing false and/or misleading information to investors, including unit volume metrics and franchise closures. As a result, shareholders filed a class action lawsuit in February seeking financial damages related to the allegations against the company.

Xponential Fitness announced in a press release that it plans to continue working with the SEC and will cooperate with the USAO.

Xpotential reaffirmed its full-year 2024 guidance, which was previously announced on May 2.

The company did not respond to a request for comment about the probe.

Wolfmeyer stated that we are pleased that our financial targets remain intact and Ms. Morris appears to be a suitable leader for the interim role.

However, Wolfmeyer noted that the firm remains cautious.

She added that despite Friday's pullback, we still have difficulty accepting this name.