Shares of Xponential Fitness, the parent company of CycleBar and Pure Barre fitness studios, bounced around in trading Monday after the company announced late Friday that CEO Anthony Geisler would be suspended indefinitely and would become an inactive member of the board.
The company's shares were initially down about 10% Monday morning, but rebounded and ended the trading session 11% higher. The company has a market capitalization of just under $500 million.
Brenda Morris, a board member since 2019, will be stepping in as interim CEO.
Xponential Fitness, which owns more than 3,000 boutique fitness and wellness studios globally, also said it received notice last week of a probe by the U.S. Attorney's Office for the Central District of California.
"As it relates to the investigation, it sounds like the information requested largely mimics that of the previously disclosed SEC investigation," said Korinne Wolfmeyer, an analyst at Piper Sandler. Piper Sandler maintains a hold rating on Xponential Fitness stock, but lowered its price target to $9 from $12. As of Monday's close, shares were trading for $9.44 apiece.
Xponential Fitness' leadership had previously disclosed an SEC investigation in December, which alleged that the company provided false and/or misleading information to investors, including unit volume metrics and franchise closures. Shareholders filed a class action lawsuit related to the allegations against the company in February seeking financial damages.
"The Company intends to continue cooperating with the SEC and intends to cooperate with the USAO," Xponential Fitness said in a press release announcing the executive changes.
Xponential Fitness also reaffirmed its full-year 2024 guidance, which was previously announced May 2.
The company did not respond to CNBC's request for comment about the probe.
"In our view, we're pleased financial targets are still intact, and Ms. Morris seems like a fit leader for the interim role," Wolfmeyer said.
However, Wolfmeyer noted that the firm remains cautious.
"We struggle to get behind this name even after Friday's pullback," she added.
Correction: This story has been updated to correct Xponential Fitness's market capitalization, which is just under $500 million.