XPOF · Xponential Fitness
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $5.90
Note written ·
Price against the kill line
20.3% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $5.90, on record since 11 November 2026. The shares are down 7.7% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $5.90, the 200-day average of closes as of 11 November 2026, which would show the shares leading the S&P 500. A signed merger agreement at or above $5.61 per share would also show the shares leading.
Research onlyNot in the portfolio.
Key figures from the filings · Consumer Discretionary
Quarter to 30 September 2026, filed 9 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 2.9
- Revenue, change on a year (%)
- +23.4
- Operating margin (%)
- 664.0
- Free cash flow, four quarters ($M)
- −12.2
- Net cash, cash less debt ($M)
- −494
- Enterprise value to sales (×)
- 65.0
- Enterprise value to operating income (×)
- 21.4
- Free-cash-flow yield (%)
- −5.3
All filed numbers
What Xponential Fitness reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Operating margin (%) |
|---|---|---|---|
| first filed | 2.9 | +23.4 | 664.0 |
| first filed | 2.7 | −1.0 | 352.0 |
| first filed | 2.2 | −17.4 | 603.3 |
| first filed | 3.4 | +8.8 | −244.6 |
| first filed | 2.4 | −37.4 | 149.6 |
| first filed | 2.7 | −22.0 | 542.8 |
| Pre-tax income ($M) | 5.0 |
| Net income ($M) four quarters: −33.5 | 4.2 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +40.3 |
| Operating cash flow ($M) | −10.4 |
| Capital spending ($M) | 1.8 |
| Free cash flow ($M) | −12.2 |
| Cash and short-term investments ($M) | 27.2 |
| Debt ($M) long-term debt | 521 |
| Net cash, cash less debt ($M) | −494 |
| Deferred revenue ($M) −21.1% on a year | 81.4 |
| Backlog, orders not yet delivered ($M) −20.1% on a year | 71.7 |
| Receivables ($M) | 14.8 |
| Inventory ($M) | 5.3 |
| Shareholders' equity ($M) | −316 |
| Market value ($M) | 232 |
| Enterprise value, market value plus net debt ($M) | 726 |
| Enterprise value to sales (×) | 65.0 |
| Enterprise value to operating income (×) | 21.4 |
| Price to earnings (×) | Not meaningful |
| Price to book value (×) | Not meaningful |
| Free-cash-flow yield (%) | −5.3 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 24.7% of shares outstanding sold short, 13.3 days of average trading to cover, +11.4% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $0 |
| 12 monthsfrom | $964K | $0 |
The thesis
Xponential Fitness's third-quarter report weakened the business behind Fund 1 Investments' $5.61 to $7.00 per share cash proposal, and the board has given the proposal no public answer. The shares are more likely to lag the S&P 500 than lead it over the next three months. A signed or financed deal from the board's strategic review would settle it the other way.
The 5 November 2026 release reported North America same-store sales down 7.5%, a cut to 2026 net new studio guidance to 124–130 from about 150, and a narrowing of adjusted EBITDA guidance to $91.0–$94.0 million from $91.0–$97.0 million. EBITDA is earnings before interest, taxes, depreciation and amortization. The company said it does not intend to comment further on the review until it concludes, and it did not name Fund 1.
The shares closed at $4.79 on 11 November 2026, under the $5.61 low end of Fund 1's range. They have recovered from the $4.42 close of 5 November 2026, the day of the report. The company filed its third-quarter Form 10-Q with the SEC on 9 November 2026.
Bullish and bearish views on Xponential Fitness, Inc.
The bull case on Xponential Fitness, Inc. (XPOF), in brief: a cash proposal remains on the table. The bear case: studio sales fell faster.
Bull case
- A cash proposal remains on the table. Fund 1's Schedule 13D/A of 30 October 2026 proposes $5.61 to $7.00 per share in cash, at least 50% above the $3.74 close of 29 October 2026. No withdrawal or board rejection had been reported as of 12 November 2026.
- The sale process is still open. The 5 November 2026 release says the board, led by independent directors and advised by Jefferies, is reviewing alternatives that may include a sale or merger.
- Large holders favor a transaction. Fund 1 reported 4,170,610 Class A shares, or 9.9%, on 30 October 2026 and said it would seek a waiver of the company's rights plan to work with other holders. Voss Capital called for a sale in an open letter in March 2026.
- The profit floor in guidance survived. The company kept the low end of 2026 adjusted EBITDA at $91.0 million on 5 November 2026. Revenue guidance stayed at $250.0 to $260.0 million.
- Club Pilates economics remain strong. Management said on the 5 November 2026 call that average sales per Club Pilates studio exceed $1 million, according to a TradingKey transcript. It attributed the brand's 5.6% same-store decline mainly to new-member acquisition rather than retention.
Bear case
- Studio sales fell faster. North America same-store sales fell 7.5% in the third quarter, against a 0.8% decline a year earlier, per the 5 November 2026 release.
- Guidance came down again. On 5 November 2026 the company cut 2026 net new studio openings to 124–130 from about 150 and narrowed the top of its adjusted EBITDA range by $3.0 million.
- The quarter missed estimates. Revenue fell 21% to $62.3 million, against a $63.0 million estimate, and adjusted earnings of $0.04 a share missed an $0.11 estimate, per Benzinga on 5 November 2026. Adjusted EBITDA fell 27% to $24.3 million.
- No relief is signaled yet. Management modeled fourth-quarter sales at levels similar to the third and declined to discuss current-quarter same-store sales, according to the TradingKey transcript of the 5 November 2026 call.
- Debt is heavy against shrinking cash flow. At 30 September 2026 the company reported $521.1 million of long-term debt and $27.2 million of cash, equivalents and restricted cash. Operations used $21.1 million of cash in the first nine months of 2026.
- The proposal is non-binding and unanswered. The 30 October 2026 filing discloses no financing commitments, and the 5 November 2026 release does not mention Fund 1.
Price setup
The shares closed at $4.79 on 11 November 2026, after $4.59 on 10 November 2026, $4.74 on 9 November 2026, $4.65 on 6 November 2026 and $4.42 on 5 November 2026. The 3-month change is −1.6%, measured from the $4.87 close of 13 August 2026.
The last close sits above the 50-day average of closes at $4.38 and well below the 200-day average of closes. The 52-week high is $9.25 (intraday, 2 February 2026), and the last close is 48.2% below it. The 52-week closing low is $3.65 on 18 September 2026.
The market price reflects a partial chance of a deal: the shares closed at $3.74 on 29 October 2026, before the Bloomberg report and Fund 1's filing, and at $4.79 on 11 November 2026, still below the low end of the proposed range.
SEC Form 4 filings show only director share grants dated 1 October 2026, filed 15 October 2026, and a CEO tax withholding on 7 August 2026, filed 27 August 2026. They show no open-market insider purchases. UBS's $4.50 target with a Neutral rating, reported by Benzinga on 16 September 2026, predates both the proposal and the third-quarter report.
Catalysts ahead
- not yet scheduled: Board response to Fund 1's $5.61–$7.00 take-private proposal. A special committee or opened talks would support a move toward the proposed range; a rejection would remove the premium.
- not yet scheduled: Conclusion of the strategic review led by independent directors with Jefferies. The company says it will not comment further until then, so this decides whether any sale or merger follows.
- ~26 February 2027 (est.): Fourth-quarter 2026 report. Tests management's model of fourth-quarter sales similar to the third and whether same-store sales improve from the 7.5% decline.
What would change the view
A daily close above $5.90, the 200-day average of closes as of 11 November 2026, which would show the shares leading the S&P 500. A signed merger agreement at or above $5.61 per share would also show the shares leading.
What it trades with
The shares trade mainly on the outcome of the board's review and on Fund 1's next filing. The 30 October 2026 jump of 19.5% intraday to $4.47 came on Bloomberg's report and the 13D/A, not on a company result, per Benzinga.
Boutique fitness demand is the second driver. Management cited card-spending figures on the 5 November 2026 call showing a wider slowdown in the third quarter than in the first half of 2026. With $521.1 million of long-term debt, the equity also depends on lenders' willingness to finance any buyout.
The evidence, claim by claim (8)
- Third-quarter revenue fell 21% to $62.3 million from $78.8 million; adjusted EBITDA fell 27% to $24.3 million. Q3 2026 earnings release (8-K exhibit 99.1) · as of
- North America same-store sales fell 7.5% in the third quarter, versus a 0.8% decline a year earlier; Club Pilates same-store sales fell 5.6%. Q3 2026 earnings release; TradingKey transcript of 5 November 2026 call · as of
- 2026 net new studio guidance was cut to 124–130 from about 150; adjusted EBITDA guidance narrowed to $91.0–$94.0 million from $91.0–$97.0 million; revenue guidance stayed at $250.0–$260.0 million. Q3 2026 earnings release (8-K exhibit 99.1) · as of
- Long-term debt was $521.1 million and cash, equivalents and restricted cash were $27.2 million; operations used $21.1 million of cash in the first nine months of 2026. Q3 2026 earnings release (8-K exhibit 99.1) · as of
- The board's strategic review with Jefferies continues and may lead to a sale or merger; the company does not intend to comment further until it concludes, and the release does not name Fund 1. Q3 2026 earnings release (8-K exhibit 99.1) · as of
- Fund 1 Investments delivered a non-binding proposal to take Xponential private at $5.61 to $7.00 per share in cash, at least 50% above the $3.74 close of 29 October 2026. Schedule 13D/A Amendment No. 4, Fund 1 Investments, LLC · as of
- Fund 1 Investments beneficially owns 4,170,610 Class A shares (9.9%) and says it would seek a waiver of the rights plan to work with other holders. Schedule 13D/A Amendment No. 4, Fund 1 Investments, LLC · as of
- The company filed its Form 10-Q for the quarter ended 30 September 2026 with the SEC. SEC EDGAR filing list, Xponential Fitness, Inc. · as of
Sources
- Xponential Fitness, Inc. - Form 8-K - FY2026 · sec.gov ·
- Xponential Fitness (XPOF) Q3 2026 Earnings Call: Revenue Falls 21%, Guidance Updated · tradingkey.com
- Xponential Fitness (NYSE:XPOF) misses Q3 2026 revenue estimates, stock drops · finance.yahoo.com ·
- News analysis · franchiseinvestordata.com
- ocbj.com
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