A securities class action has been filed in the USDC – W.D.TX against F45 Training Holdings, Inc. (FXLV) on behalf of purchasers of the securities of F45 issued in or traceable to the Registration Statement filed with the U.S. Securities and Exchange Commission in support of the July 16, 2021 initial public offering of F45 common stock.
F45 Training Holdings Inc., a Mark Wahlberg-backed fitness franchisor based in Texas, went public in July 2021, when it sold 18.75 million shares priced at $16 per share, while touting a “Predictable, Asset-Light Model Driving Rapid Growth.” The company reported results and issued guidance that was generally expected by the market for about a year after the IPO.
However, on July 26, 2022, F45 issued a press release in which it drastically reduced its financial guidance; disclosed that would open about 60% fewer exercise studios than promised just two months earlier; said that a $250 million credit line was no longer available to the company; disclosed that the company was letting go of about 110 employees; and announced that the CEO, Adam Gilchrist, had resigned.
The disclosures in the press release sent the price of F45 shares down over 60% on July 27, 2022, and it has continued since that time to trade at less than $4.00 per share.
According to the lawsuit, the registration statement and prospectus used to effectuate the Company’s IPO contained untrue statements of material fact or omitted to state other facts necessary to make the statements made not misleading and was not prepared in accordance with the rules and regulations governing its preparation. Specifically, the offering documents made false and/or misleading statements and/or failed to disclose that:
- F45’s rapid growth strategy was unsustainable, reliant on, inter alia, franchisees opening multiple locations in a short period of time and/or dependent on franchisees who required near 100% financing of their operations in order to open for business; and
- as a result, the offering documents misrepresented and failed to disclose material adverse facts pertaining to the Company’s business, operations, and prospects.