Investors may be overreacting to Weight Watchers' subscriber dip

Is the Oprah Winfrey halo staring to fade from Weight Watchers?Weight Watchers shares fell nearly 15%...

Posted: Aug 8, 2018 8:05 AM
Updated: Aug 8, 2018 8:06 AM

Is the Oprah Winfrey halo staring to fade from Weight Watchers?

Weight Watchers shares fell nearly 15% Tuesday after the company reported a decline in subscribers between the first and second quarters.

But the market may be overreacting to a calendar problem.

For the past few years, Weight Watchers has reported a similar dip in subscribers during that period. The rolls grow again as the year progresses, which makes sense.

People are often gung-ho about exercising, eating better and losing weight right after the winter holidays. But New Year's resolutions can be hard to maintain in the spring and summer.

Even though some subscribers drop out in the first few months of the year, total subscribers are actually way up since Winfrey joined. The base grew 28% from a year ago to 4.5 million.

In the third quarter of 2015, the company had fewer than 2.6 million subscribers.

Despite the big drop in the stock Tuesday, the company's latest profits actually topped forecasts, and it raised its outlook.

Shares in the company are up nearly 80% this year and have skyrocketed more than 1,000% percent since Winfrey first invested about $43 million.

Weight Watchers has done an extraordinary job over the past few years of making the company's programs more exciting for a broader base of people, particularly since Mindy Grossman -- formerly of HSN -- took over as CEO last year.

The new Weight Watchers Freestyle program lets you eat a wider variety of food. Weight Watchers has also partnered with meditation company Headspace to provide exclusive content on the Weight Watchers app to its subscribers.

It's all about wellness, not necessarily how many pounds you've lost.

Grossman said during an earnings call with analysts Monday evening that beginning next January, no artificial ingredients will appear in any Weight Watchers-branded products. And she quoted Winfrey, who said at a Weight Watchers event in February that "healthy is the new skinny."

Related: Oprah Winfrey has made a killing on Weight Watchers stock

In addition to Winfrey, who is also a board member and the company's third largest investor with a 5% stake worth about $450 million, Weight Watchers has brought on actor Kevin Smith, music star DJ Khaled and celebrity chef Eric Greenspan as "ambassadors" for the company.

So there's no issues with Oprah's halo. Weight Watchers still looks pretty healthy.

New York Coronavirus Cases

County data is updated nightly.

Cases: 1949964

Reported Deaths: 51036
CountyCasesDeaths
Kings2574879838
Queens2571609467
Suffolk1894243294
Nassau1737723087
Bronx1713676335
New York1290134276
Westchester1235482228
Erie787271673
Richmond688921729
Monroe590621026
Orange45057782
Rockland44952931
Onondaga35252658
Dutchess27258429
Albany23217341
Oneida21142497
Niagara17527332
Broome17007347
Saratoga14044159
Ulster12664241
Schenectady12157189
Rensselaer10402135
Putnam996991
Chautauqua8149131
Chemung7001133
Oswego682590
Ontario665891
Steuben6136141
St. Lawrence608794
Sullivan590968
Cayuga575590
Jefferson536263
Wayne508466
Cattaraugus498579
Genesee4965121
Herkimer4842107
Clinton441731
Madison421885
Tompkins398849
Fulton392786
Livingston390258
Columbia377999
Montgomery3772114
Cortland348760
Warren329955
Tioga328558
Wyoming318651
Allegany311883
Otsego308446
Greene305074
Chenango297372
Washington278955
Orleans268283
Lewis240233
Franklin235612
Delaware208335
Seneca182856
Schoharie148815
Essex147926
Yates108626
Schuyler97213
Hamilton2962
Unassigned16086
Out of NY0214
Rome
Partly Cloudy
71° wxIcon
Hi: 69° Lo: 54°
Feels Like: 71°
Binghamton
Cloudy
57° wxIcon
Hi: 67° Lo: 52°
Feels Like: 57°
Rome
Partly Cloudy
71° wxIcon
Hi: 71° Lo: 53°
Feels Like: 71°
Rome
Partly Cloudy
71° wxIcon
Hi: 68° Lo: 49°
Feels Like: 71°
WKTV Radar
WKTV Temperatures
WKTV Severe Weather
Saluting Those Who Are Proud 2 Serve
Looking for work or looking to hire? Check out the WKTV Job Fair!