What Happened?
Shares of boutique fitness studio franchisor Xponential Fitness (NYSE: XPOF) jumped 19% in the afternoon session after the company announced a significant debt refinancing and a plan to repurchase all of its convertible preferred stock, a move that prevents dilution for existing shareholders. Xponential Fitness entered into a new credit agreement for a $525 million five-year term loan and a $25 million revolving credit line. The company used the proceeds to refinance its existing debt and to buy back preferred stock that could have been converted into approximately 8.2 million common shares. This action was viewed positively by investors because it prevented the value of existing shares from being diluted. Additionally, the company's Chief Financial Officer noted that the refinancing could also lead to lower interest payments if certain financial milestones were achieved.
The shares closed the day at $8.01, up 17% from previous close.
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What Is The Market Telling Us
Xponential Fitness’s shares are extremely volatile and have had 45 moves greater than 5% over the last year. But moves this big are rare even for Xponential Fitness and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 18 days ago when the stock gained 9.7% on the news that comments from a key Federal Reserve official bolstered hopes for an interest rate cut. New York Federal Reserve President John Williams stated he sees “room for a further adjustment” in the near term, sparking a significant market rally. Following his remarks, the probability of the central bank cutting rates at its December meeting jumped from 39% to over 73%, according to the CME FedWatch tool. This positive sentiment provided relief to markets amid concerns over high valuations, particularly in AI-related stocks.
Xponential Fitness is down 42.6% since the beginning of the year, and at $8.01 per share, it is trading 56.7% below its 52-week high of $18.47 from February 2025. 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 $653.47.
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