Key Points
- WeightWatchers stock hit all-time lows after its Q4 2023 earnings report, missing consensus EPS estimates by $1.00 and Oprah Winfrey leaving the Board of Directors.
- Oprah will also be donating her financial stake in WW to the National Museum of African American History and Culture.
- WeightWatchers expects to return to YoY growth in subscription revenues in the second half of 2024.
- 5 stocks we like better than WW International
WW International Inc. NASDAQ: WW (WeightWatchers) has had a disastrous 2024, with its shares collapsing 66.7% year-to-date (YTD). The company made a praiseworthy strategic pivot in 2023, acquiring Sequence Inc. to enter into the GLP-1 clinical weight loss space, gaining the ability to prescribe medications like Novo Nordisk A/V NYSE: NVO owned Ozempic and Wegovy and Eli Lilly& Co. NYSE: LLY GLP-1 agonists like Mounjaro and Zepbound. The foresightful move complemented its flailing WeightWatchers business.
WeightWatchers Shares Surge and Slide
Shares rocketed towards Goldman Sach's $13 price target, which was raised from $3.80. Incidentally, Weight Watchers achieved the target price, hitting $13.31 in October 2023 before plunging to all-time lows of $2.79 after its underwhelming Q4 2023 earnings release. Additionally, its famed director, Oprah Winfrey, who lost over 60 pounds on GLP-1 meds, opted not to seek reelection to its Board of Directors. Investors are left to ponder if Weightwatchers will ever regain its mojo.
Leading the GLP-1 Platform Trend
Weight Watchers was one of the first platforms to jump on the GLP-1 weight loss trend, which was embraced by telehealth platforms like Teladoc Health Inc. NYSE: TDOC, LifeMD Inc. NASDAQ: LFMD and Hims & Hers Inc. NYSE: HIMS in the medical sector.
The WeightWatchers Turnaround Loses Shape
On Feb. 28, 2024, Weightwatchers reported a fourth-quarter 2023 GAAP EPS loss of $1.11, missing consensus estimates for a loss of 11 cents by $1.00. Revenues continued to fall 7.6% YoY to $205.96 million versus $206.91 million consensus estimates. Subscribers at the end of the period rose 7.1% to $3.8 million, with 67,000 end-of-period clinical subscribers. Gross margins were 60.4% and 61.4% adjusted, excluding the net impact of restricting charges. Operating loss was $6 million.
For 2023, WeightWatchers ended the year with 67,000 clinical subscribers, which is up 47% sequentially and 3X when the acquisition of Sequence Inc. was announced in 2023. The combination of behavioral and medical weight health solutions is the new integrated approach to the member experience.
Downside Guidance for WeightWatchers Stock
WeightWatchers issued downside guidance for the full year 2024 with revenues of $830 million to $860 million versus $924.03 consensus estimates. The guidance reflects a $55 million YoY headwind from the decision to wind down its low-margin consumer products business. The company's reporting segments will change in 2024, reporting as one segment based on total revenues from North America and internationally.
Oprah Walks Away from WeightWatchers
Oprah Winfrey has been on the WeightWatchers Board of Directors since 2015. Her presence was a ringing endorsement for the brand. Oprah's weight loss of over 60 pounds using GLP-1 treatments further helped the brand, especially during its strategic pivot to focusing on GLP-1 drug prescriptions. However, Oprah stepping down from the Board and donating her shares to the National Museum of African American History and Culture insinuates the loss of her endorsement of the brand. This is what the stock reflects as shares tumbled to their lowest levels ever. It also reveals that the shares had a very real Oprah halo effect that was able to put in a floor, which appears to be gone now.
WeightWatchers CEO comments
WW International CEO Sima Sistani noted that the restructuring also recalibrated their marketing spend. They recalibrated the bulk of their spending to Q3 from Q1, when traditionally 40% of annual sign-ups occurred in the first quarter. They will take the same approach in 2024.
Sistani commented, “We are on track to deliver growth in total subscribers in 2024, expecting to end the year with subscribers in the range of 3.8 million to 4.0 million, including between 140 thousand and 160 thousand subscribers to our new WeightWatchers Clinic.”
WW International analyst ratings and price targets are at MarketBeat. WW International peers and competitor stocks can be found with the MarketBeat stock screener.
Daily Descending Triangle
The daily candlestick chart for WW illustrates a descending triangle pattern. The descending upper trendline formed at $3.92 on Feb. 28, 2024, capping bounce attempts at lower highs. The flat-bottom lower trendline sits at the $2.79 low. The daily relative strength index (RSI) has been flat near the 40-band since its earnings release. Pullback support levels are at $2.79, $2.42, $2.04 and $1.58.
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