why is f45 stock dropping?

Why is F45 (FXLV) stock dropping?

This article directly answers why is f45 stock dropping and walks through the operational, financial, regulatory and market events that drove the dramatic decline in F45 Training Holdings (ticker: FXLV). Readers will get a clear timeline of major events, the primary causes behind the sell‑off, the market consequences after delisting and practical indicators to watch going forward.

Lead summary

why is f45 stock dropping? In short, a combination of poor financial results that were later restated to show much larger losses, missed SEC filings and NYSE compliance failures, weakening franchise economics and leadership turnover ignited investor selling. As negative disclosures accumulated — including restated losses and litigation — the stock fell, the company announced plans to delist, and FXLV moved to over‑the‑counter trading. The market reaction reflected reduced investor confidence, impaired liquidity, and heightened legal and operational risk.

Background

Company overview

F45 Training is an Australian‑founded fitness concept built around franchised, small‑group studio workouts. The business model relies primarily on franchise fees, studio royalties and ancillary product sales while promoting rapid geographic expansion through franchise development. The company listed in the United States in 2021 under the ticker FXLV.

IPO and peak valuation

F45 completed an initial public offering in July 2021. At listing, the company carried a headline valuation that reflected high investor enthusiasm for high‑growth fitness concepts. However, that market valuation eroded quickly as growth expectations failed to materialize and subsequent disclosures revised reported results. Questions about sustainable franchise economics and corporate governance contributed to the valuation decline.

Timeline of major stock events

Early public period (2021–2022)

• As of July 2021, F45 listed publicly; early trading showed volatility as investors priced growth against pandemic hangover effects and franchise recovery dynamics.
• In the months after the IPO, the stock fluctuated as quarterly results and guidance failed to meet optimistic assumptions embedded at listing.

Mid‑2022 sell‑off and management changes

• As of July 27, 2022, why is f45 stock dropping became a frequent query after reporting that CEO and key leadership changes, workforce reductions and sharply reduced guidance coincided with a large intraday sell‑off (source: The Motley Fool, Jul 27, 2022). The market interpreted leadership turnover and lowered guidance as signs the business model was under stress.

2023 compliance notices and delisting (Aug–Sep 2023)

• By mid‑August 2023, F45 faced NYSE notices for non‑compliance, tied to prolonged sub‑$1 share prices and late SEC filings. As of Aug 16–17, 2023, the company announced its intent to delist and the NYSE subsequently moved to remove the listing (sources: Leisure Opportunities, Aug 16, 2023; Australian Financial Review, Aug 17, 2023).

Post‑delisting developments (late 2023)

• As of Oct 24, 2023, F45 filed restated financials that disclosed substantially larger net losses (hundreds of millions), and referenced pending litigation and weakened franchise metrics (source: AthleTech News, Oct 24, 2023). After delisting, trading continued over‑the‑counter and legal actions and investor claims persisted.

Primary causes of the stock decline

Financial performance and restatements

One major reason why is f45 stock dropping is the company’s restated financial statements. The restatements revealed materially larger net losses than previously reported, undermining investor trust and reducing forward earnings expectations.

• As of Oct 24, 2023, management disclosed restated results showing aggregate losses totaling in the hundreds of millions of dollars for recent periods (source: AthleTech News). Those revisions signaled that prior public disclosures had materially understated losses and damaged credibility with investors and lenders.

Failure to file and regulatory non‑compliance

Regulatory non‑compliance amplified concerns. Missing or late SEC filings triggered NYSE notifications and raised the possibility of more restatements or undisclosed liabilities.

• As of Aug 2023, the company received notice for failing to meet listing obligations related to timely filings and minimum share price standards; investors reacted negatively to the prospect of regulatory escalation.

Prolonged low share price and NYSE listing standards

Sustained low trading prices enabled delisting procedures. The NYSE’s rules allow the exchange to initiate delisting when the share price is under the required threshold for an extended period. That procedural move accelerated uncertainty and liquidity loss.

• The >30‑day sub‑$1 trading window was a key mechanical trigger in the August 2023 delisting process.

Weakening franchise economics and franchisee distress

F45’s franchised model requires healthy unit‑level economics and steady franchise growth. Reports of franchise closures, franchisee cash flow stress, slower new unit openings and weaker same‑store metrics reduced forward revenue visibility.

• As franchisees struggled to maintain membership and pay fees, the company’s royalty base and up‑front franchise revenue slowed, worsening short‑term cash outlooks and long‑term growth assumptions.

Leadership turnover and governance concerns

High executive turnover — including departures of the CEO and other senior officers — created governance concerns and a leadership vacuum during a critical recovery phase.

• Investors interpreted frequent management changes as signs of strategic instability and weaker internal controls.

Legal disputes and shareholder/class action risk

Lawsuits filed by celebrity promoters and investor class actions alleging misleading disclosures introduced latent liabilities and reputational damage.

• Claims by celebrities and investor class actions raised the prospect of costly settlements and further disclosure of adverse facts.

Liquidity, financing and macro sensitivity

Reduced access to capital markets and franchise financing coupled with macroeconomic sensitivity to discretionary spending (consumer fitness subscriptions) made the business more vulnerable to rate and spending shocks.

• With public market access impaired post‑delisting, financing alternatives were more limited and more expensive.

Investor confidence and market reaction

The combination of the above factors led to cascading investor sell‑offs. Negative headlines, restatements, legal actions and delisting news produced sharp intraday declines as confidence and liquidity dried up.

• Market psychology amplified the mechanical pressures of reduced liquidity, creating steeper price drops.

Key events and dates (chronological highlights)

• July 2021 — IPO and initial valuation. Source: Company filings and market reports. Significance: Company listed in the U.S. amid high growth expectations.

• July 27, 2022 — Major stock drop after CEO steps down, guidance cuts and layoffs. Source: The Motley Fool (Jul 27, 2022). Significance: Early public‑market volatility tied to leadership turnover and sharply reduced outlooks.

• Aug 15–17, 2023 — Share price plunges after disclosure of delisting plans and NYSE non‑compliance notices. Sources: InvestorPlace (Aug 15, 2023); Leisure Opportunities (Aug 16, 2023); Australian Financial Review (Aug 17, 2023). Significance: Company announced intent to delist; the market reacted with heavy selling.

• Sep 3, 2023 — NYSE moves to delist; company effectively “goes dark.” Source: The Sydney Morning Herald (Sep 3, 2023). Significance: Listing removal reduced disclosure obligations and moved trading to OTC venues.

• Oct 24, 2023 — Restated financials reveal approximately $372M loss and highlight pending litigation. Source: AthleTech News (Oct 24, 2023). Significance: Restatements confirmed materially worse financial performance than earlier reported.

(Each source above reported these milestones on the cited dates and provided the basis for market reactions and subsequent developments.)

Market and investor consequences

Delisting and “going dark”

One major outcome that explains why is f45 stock dropping is the procedural and informational consequences of delisting. "Going dark" generally means deregistration from SEC reporting, reduced public disclosures and listing removal, frequently shifting trading to over‑the‑counter venues with thinner liquidity.

• As of Sep 2023, the move from NYSE listing to OTC significantly reduced liquidity and made timely access to audited disclosures more difficult for investors (source: The Sydney Morning Herald, Sep 3, 2023).

Impact on franchise financing and operations

A weak public valuation and reduced transparency can impair franchise financing, slowing new openings and increasing franchisee capital strain.

• With fewer financing partners willing to underwrite new studio openings when the franchisor lacks public‑market credibility, growth can stall and legacy franchisees may face closure or renegotiation.

Losses for retail and institutional holders

From IPO highs to post‑delisting lows, many retail and institutional investors experienced large unrealized and realized losses. The reputational damage to early backers and celebrity endorsers was also significant.

• Reported intra‑period declines exceeded major percentages in short timeframes, reflecting the compounding effect of restatements, litigation risk and forced selling in low‑liquidity markets.

Company response and turnaround plans

Management statements and leadership changes

After the market reaction and restatements, F45’s leadership outlined intentions to refocus on franchisee profitability and franchise network stability.

• Interim management steps included a renewed emphasis on cost discipline, operational oversight and governance improvements, alongside recruitment of experienced turnaround executives.

Restructuring, cost cutting and partnerships

To stabilize operations, management disclosed cost reductions, workforce adjustments and strategic partnerships aimed at member engagement and product enhancement.

• As an example of partnership activity, the company referenced technology and wellness collaborations intended to improve member retention and studio economics.

Limitations of the plan

Despite stated plans, constraints remain. Legal liabilities, past losses and diminished public market access limit near‑term capital options and mean recovery could be protracted.

• Ongoing litigation, possible further restatements and continued franchisee attrition present material downsides.

Legal and regulatory issues

Summary of prominent lawsuits

F45 faced multiple legal claims, including litigation tied to celebrity promoters and class actions from investors alleging misleading statements during the IPO and in subsequent disclosures.

• These cases asserted that public statements overstated growth prospects and understated franchisee struggles, and they sought remedies including damages and rescission.

Regulatory implications of restatements

Restated financials invite heightened regulatory scrutiny and can be grounds for enforcement inquiries or additional investor litigation.

• Restatements erode managerial credibility and can trigger investigations into prior reporting practices; they also raise the risk of penalties or negotiated settlements.

Analysis — how the factors interacted to push the stock down

The decline in F45’s share price was not driven by a single, isolated event. Instead, a cluster of interrelated problems combined to erode investor confidence and liquidity.

• Operational pressure: weakening franchise economics (fewer openings, lower royalty revenue, higher franchisee churn) reduced forward cash‑flow visibility.

• Financial transparency failures: restated results exposed deeper than anticipated losses and damaged the credibility of prior disclosures.

• Governance and leadership instability: executive departures during a turbulent period increased the perceived execution risk.

• Regulatory mechanics: NYSE listing standards and missed filings produced an operational path to delisting once share prices remained low, accelerating the decline.

• Legal exposure: pending lawsuits and class actions created potential contingent liabilities and reputational harm.

Combined, these elements produced a negative feedback loop: poor results and disclosures triggered selling; selling lowered price and liquidity, which in turn triggered listing sanctions and further sell‑offs. That cascade explains why is f45 stock dropping more steeply than might have been expected from any isolated problem.

What investors should watch going forward

Near‑term indicators

• Upcoming financial filings and audit updates: timely, transparent reporting will be critical to rebuild credibility.

• Litigation outcomes: settlements, dismissals or adverse judgments could materially affect capital needs and timing of recovery.

• Franchise performance metrics: same‑store trends, new store openings, franchisee retention and fee receipts will show whether unit economics are improving.

• Management appointments and governance changes: experienced leadership with clear operational plans is a positive sign.

• Any attempt to re‑list or raise capital: plans to return to a major exchange or secure incremental financing will show strategic intent and access to capital.

Risk considerations

• Illiquidity and limited disclosure while “dark”: OTC trading tends to have lower volumes and wider spreads, complicating entry/exit and price discovery.

• Potential additional restatements or legal losses: these can produce new waves of negative disclosure.

• Franchise network health: a continued deterioration in franchisee economics would constrain recovery and cash generation.

This checklist helps stakeholders understand the measurable outcomes that will determine whether the company can stabilize and rebuild public trust.

References and sources

• "F45 Delisting from NYSE: Impacts & What's Next" — Oxygen Consulting (reported Aug 20, 2023). As of Aug 20, 2023, Oxygen Consulting analyzed delisting impacts and market implications.

• "Shares in F45 plummet after it delists from NY Stock Exchange and 'goes dark'" — Leisure Opportunities (reported Aug 16, 2023). As of Aug 16, 2023, Leisure Opportunities reported a steep share‑price decline after delisting announcements.

• "F45’s Decline and the State of the Fitness Industry" — TwoBrain Business (reported Nov 10, 2023). As of Nov 10, 2023, TwoBrain Business reviewed franchise and industry dynamics contributing to F45’s challenges.

• "Investors feel the burn as F45 booted from New York Stock Exchange" — The Sydney Morning Herald (reported Sep 3, 2023). As of Sep 3, 2023, SMH covered the NYSE delisting decision and investor impact.

• "F45 Reveals $372M Loss as CEO Plots Plan Forward" — AthleTech News (reported Oct 24, 2023). As of Oct 24, 2023, AthleTech News reported restated losses and management’s forward statements.

• "F45 to quit the NYSE as share price languishes" — Australian Financial Review (reported Aug 17, 2023). As of Aug 17, 2023, AFR discussed the company’s decision to delist amid a low share price.

• "Why Is F45 Training (FXLV) Stock Down 65% Today?" — InvestorPlace (reported Aug 15, 2023). As of Aug 15, 2023, InvestorPlace summarized the market reaction to delisting plans.

• "Why F45 Training Stock Plunged Today" — The Motley Fool (reported Jul 27, 2022). As of Jul 27, 2022, Motley Fool explained the mid‑2022 sell‑off tied to leadership changes and reduced guidance.

Notes: dates above are cited to provide contemporaneous context for the events described. Primary reporting and company filings from the same windows underlie the summarized figures and descriptions.

See also

• Franchising business models and unit economics
• Stock delisting and "going dark" processes
• Restated financial statements: implications and governance
• Celebrity endorsement litigation in franchised businesses

Further reading and next steps

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