F45 will pull its shares from the NYSE — but there may be a silver lining

Australian-born gym chain F45 intends to delist its shares from the New York Stock Exchange, after what one market observer dubbed a “disaster” run for the company since its powerhouse IPO lifted the company to a $2 billion valuation.

F45, an early pioneer of the box gym franchise model, announced on Wednesday its intention to pull its shares from the NYSE after two years of public trading.

The company has fallen behind on public filings required for listing on the stock exchange, and its average share price has languished below US$1 for 30 days, the company stated.

“Going dark” will shave the ongoing costs associated with public listing, the company added, while noting its low trading price has hampered its ability to raise capital and attract institutional investors.

F45’s share price has plummeted since the announcement, from about US$0.70 a share on Monday to US$0.12 at time of writing.

F45 was valued at US$17 a share at its June 2021 IPO, giving it an estimated value of US$1.46 billion at the time.

From deadlifts to delist

The decision to delist does not come as a shock given its struggles since delivering an IPO, said Jason Andrew, founder of accounting and operational finance firm SBO and a keen observer of F45’s business.

“I’m not surprised, I think it’s it’s just been a bit of disaster since the IPO and everything that’s gone on,” Andrew told SmartCompany.

F45 went public at a point when generous US monetary policy flooded the market with cash, encouraging investors to back a business that reported 2,247 franchises across 63 countries in March 2021.

Yet the economic slowdown made it harder for new franchisees to obtain the capital they needed to buy into the F45 model.

Separately, an in-house financing option F45 used to encourage existing franchisees to expand also evaporated, further curtailing growth.

F45 issued a dramatic downgrade to its revenue projections in July last year, halving its full-year FY22 revenue projections.

Its share price did not recover to anywhere near IPO levels, oscillating between approximately $US3.50 and $US0.50 since then.

Andrew previously speculated a buyout offer could give the company a new direction.

But F45’s admission it has fallen behind on its reporting requirements, and its share price woes, mean going private was a commonsense decision, Andrew said.

“Honestly, I think they [said], ‘Well, this is dragging out too long. I think we better do the right thing by shareholders and delist it as opposed to making a buyout offer [at a low share price].'”

New direction after “going dark”

While going private means F45 will no longer be able to raise capital from public markets, raising capital from investors while share prices languish is “extremely difficult” anyway, Andrew said.

Not being subject to the whims of investors may be a “silver lining”, enabling F45 to execute longer-term goals without fears of a shareholder revolt.

“As a private company you can make freer decisions on how you pivot or improve the company,” Andrew added.

“You can do with that with a lot less media attention.”

F45 itself honed in on the potential to move more nimbly as a result of “going dark”.

“The Company will continue to focus on long-term growth, but without the distraction of short-term financial results and stock price movement,” it said.