Waistlines grow, business shrinks—WW International stock plunges amid subscriber exodus (2024)
Investors sent shares of WW International—formally known as Weight Watchers—tumbling by 26.5% after the weight-loss specialists reported a disappointing second quarter dip in sales that fell well below Wall Street expectations.
And the outlook isn’t any prettier—surprising in a period when so many of us working and schooling from home put unwelcome pounds on during lockdowns.
The company on Tuesday forecast full-year profits would fall below even the low range of analyst estimates as online subscriber growth slows. The New York–based company also put per-share earnings in the range of $1.10 to $1.25—a hefty drop from analysts’ estimates of $1.46 to $2.33, data compiled by Bloomberg show.
The company earned $8.9 million, or 12¢ a share, in the second quarter of 2021 compared with $14 million, or 20¢ a share, made in the same quarter last year. Revenue also fell to $311 million, down 10% from the $334 million logged last year.
The company noted that full-year revenue would approach $1.3 billion—which again trailed estimates of $1.39 billion—as subscriber numbers fell 1.9%. A total of 4.9 million members were logged, down from the 5 million recorded in the second quarter of 2020.
Putting on the pounds
The news comes at a unique time for our collective waistlines. Public health officials have been warning of troubling accounts of big weight gains during the pandemic. An American Psychological Association survey of U.S. adults, for example, conducted in late February 2021, a year after the pandemic began, found that 42% of adults had gained more weight than intended during lockdowns.
“There is no shortage of statistics and stories about weight gain during the pandemic,” said chief executive Mindy Grossman, who chalked up the lackluster results in revenue and operating income to slowing digital year-on-year growth momentum for digital subscribers. She noted that “while people are acknowledging their need for recommitting to weight loss and wellness, our recent consumer research shows that at the moment they’re also asking for a pause to enjoy social reconnection.”
“Given the prevalence of weight gain joining the pandemic, it does feel like a temporary dislocation,” said Nicholas P. Hotchkin, WWchief operating officer.
The news was also surprising as other online meal kit, food delivery, and grocery store services soared during the pandemic and are showing little to no slowdown in growth. But this too was put down to seasonal changes. “Subscriber trends in Q2 followed a more typical seasonal pattern than we expected, and our guidance reflects this trend,” said chief financial officer Amy O’Keefe.
If the stock were to finish down 26% on Wednesday, it will mark the worst one-day drop following earnings since the fourth quarter of 2018.
Unofficially, it’s been a bad day for the company on Twitter, too.
"Weightwatchers have lost 25% in size, something their clients only dream of" – @ZackEiseman
The memo, shared with CNBC, comes after heavy selling in WW shares that has seen the stock market value of the iconic weight loss company fall to under $150 million amid concerns about the company's debt load and its core weight loss business growth prospects at a time of new blockbuster drugs like Novo Nordisk 's ...
Is WW International stock a Buy, Sell or Hold? WW International stock has received a consensus rating of buy. The average rating score is and is based on 19 buy ratings, 10 hold ratings, and 1 sell ratings.
The company's financial health showed signs of strain, as evidenced by a decline in revenue and subscriber numbers, alongside wider-than-expected losses revealed in its Q4 earnings report. WeightWatchers' net income loss grew 140% to $88.1 million at the end of last year.
Her resignation was motivated by her work on an upcoming TV special on the rise of prescription weight-loss drugs, she said during a Thursday appearance on “Jimmy Kimmel Live!” “An Oprah Special: Shame, Blame and the Weight Loss Revolution” airs Monday on ABC and streams the next day on Hulu.
The weight loss company, which was founded in the early 1960s, has seen its financial results deteriorate in recent years. Its revenue in 2023 tumbled almost 15% to $889.6 million from the previous year, while it lost $112 million.
WW International, Inc. has 223.03% upside potential, based on the analysts' average price target. Is WW a Buy, Sell or Hold? WW International, Inc. has a conensus rating of Moderate Buy which is based on 4 buy ratings, 3 hold ratings and 1 sell ratings.
Contrarious Investment Management is the largest shareholder of WW, with ownership of 7.44 million shares. Other significant shareholders of WW stock include Millennium Management and Balyasny Asset Management.
Operating Loss in Q4 2023 was $6.0 million, compared to operating loss of $51.8 million in the prior year period. Adjusted operating income in Q4 2023, which excluded the net impact of $23.6 million of restructuring charges and non-cash intangible impairment charges of $3.6 million, was $21.3 million.
Oprah Winfrey will leave the board of WeightWatchers after almost 10 years, following the entertainment mogul's revelation that she is using a weight-loss drug. Winfrey informed the company this week that she decided to not stand for reelection at the annual meeting of shareholders to be held in May 2024.
Fidelity's Asset Allocation Research Team (AART) forecasts that international stocks will outperform US stocks over the next 20 years. Indeed, they expect even mature, developed markets such as Europe to outperform the US over that time.
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