Xponential Fitness Faces Major Securities Fraud Lawsuit: What Investors Need to Know

Fitness franchisor Xponential Fitness Inc. (NASDAQ: XPOF) is facing a significant securities fraud class action lawsuit targeting investors who purchased the company’s securities between July 26, 2021, and December 7, 2023. The deadline for investors to seek lead plaintiff status is April 9, 2024.

The Catalyst: Major Allegations Surface

The lawsuit stems from a series of damaging revelations about Xponential’s business practices. In June 2023, short-seller Fuzzy Panda released a critical report alleging that CEO Anthony Geisler had repeatedly misled investors regarding the company’s franchise network health. The report claimed that:

• More than 50% of Xponential’s fitness studios failed to achieve positive financial returns
• Over 100 franchises were listed for sale at prices 75% below their original costs
• At least 30 Xponential locations had been permanently shuttered
• The company had systematically issued misleading statements about store closures and franchisee financial performance

These allegations directly contradicted Xponential’s public statements about franchise stability and performance metrics.

Market Impact and Further Deterioration

The market reacted swiftly to the Fuzzy Panda report. Xponential’s stock price plummeted more than 37% in a single trading day—from $25.11 per share on June 26, 2023, to $15.72 on June 27, representing a loss of $9.39 per share.

The situation worsened in December 2023 when Businessweek published an investigative article titled “Club Pilates, Pure Barre Owners Say Xponential Left Them Bankrupt.” The publication interviewed dozens of current and former franchisees and employees who corroborated claims that Xponential had entrapped partners in financial arrangements that devolved into what they described as “financial nightmares.” Following this report, XPOF shares declined an additional 26% over two consecutive trading days.

What Investors Should Know About the Lawsuit

The class action lawsuit encompasses all investors who purchased Xponential securities during the specified period. Investors interested in representing the broader class have until April 9, 2024, to seek appointment as lead plaintiff—a position that involves directing litigation strategy while working with legal counsel approved by the court.

Participating in the recovery process does not require serving as lead plaintiff. Whether an investor pursues active involvement or remains a passive class member, they retain rights to any damages ultimately recovered in the case.

For those seeking information about litigation participation options, legal counsel specializing in securities class actions remains available to discuss case details and investor options.