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AJ Fabino

Should You Buy Shares Of Mark Wahlberg-Backed Publicly Traded Company? What You Need To Know About F45 Training

Mark Wahlberg’s F45 Training Gym Holdings Inc (NYSE:FXLV) was an Australian success story, blowing up to $1.4 billion in market value at its IPO — now, however, the company is valued at just $150 million.

Here’s the backstory: Rob Deutsch, who later teamed up with now-former CEO Adam Gilchrist, founded F45 in Sydney, Australia in 2012. The 45-minute workouts offered by F45 mix high-intensity interval, circuit, and functional training components.

The exercises are designed for customers looking for a less expensive option to one-on-one personal training. The company is now based in Austin, Texas, and relies almost entirely on a franchise model.

Deutsch and Gilchrist sold their first franchise in 2013, with growth expanding rapidly to multiple countries with hundreds of locations.

When the company expanded to the United States, it garnered attention from star-studded investors like former golfer Greg Norman, supermodel Cindy Crawford, and “Lone Survivor” actor Mark Wahlberg.

In 2019, Wahlberg, a self-proclaimed fitness fanatic, made a big bet on the training gym.

Through the investment firm MWIG LLC, the "Boogie Nights" star purchased a stake in the group fitness class provider when F45 was worth about $450 million. According to the fitness company's documents, Wahlberg and family office FOD Capital invested $100 million through MWIG in March 2019 and another $10 million a month later.

Read also: Move Over, Elon: 5 Unlikely Celebrities Who Served On Corporate Boards

In July 2021, F45 went public with a $325 million initial public offering (IPO) in which the firm sold over 20 million shares at $16 per for a market value of $1.46 billion, returning the actor at least $200 million.

However, the success was short-lived.

In F45’s first earnings report, the company missed on earnings but narrowly beat on revenues – in its second report, the company missed on both top and bottom lines, and unfortunately, it did not get better from there.

In February 2022, F45 lost a Federal court battle to Body Fit in its founding country that saw two of F45’s innovation patents revoked, as well as paying Body Fit’s legal fees.

Then on July 25, the company eliminated around 45% of its workforce, drastically cut its outlook and guidance, and announced the departure of Gilchrist.

“The revised guidance assumes that the $250 million of growth capital provided by two previously announced franchise financing facilities, which F45 had arranged for franchisees to open additional studios, will not be available despite strong demand from franchisees,” the company said in its most recent earnings report.

Price action: Shares of FXLV are down 16.03% to $1.65 according to data from Benzinga Pro.

Photo: Courtesy of Eva Rinaldi on flickr

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