Weight Watchers Shareholders: Buy Oprah, Sell Kate Hudson

Shares of WW, formerly Weight Watchers WTW, are poised for a strong Monday after a rough month and a half. Shares have fallen more than 30 percent after WW announced disappointing third-quarter EPS and revenue results.

What Happened

Kate Hudson was announced as “Global Ambassador” for the brand Sunday night in a multi-year agreement. In this capacity, Hudson is set to describe her life in wellness and encourage others to share their health goals for 2019 as a part of WW’s “For Every Body” campaign.

Ads featuring Hudson are expected to go live on December 26th.

In the press release announcing the partnership, Hudson said, "The aspect I love most about WW is the community because I know that community is so essential to wellness,” giving a nod to her role in promoting WW’s community groups.

Oprah Winfrey, a member of the WW board, was also featured in the press release.

Why It Matters (Hint: Oprah Winfrey)

105 percent is the biggest one day jump in WW share prices, according to Finscreener, which allows users to filter stocks for their biggest gaining and losing sessions. This move happened after Oprah Winfrey was announced to the board of directors and purchased newly issued shares representing 10 percent of the company on October 19th, 2015.


Data courtesy of Finscreener.

After the 105 percent one-day move, shares of WW continued to make significant moves the next day and 14 sessions after the Oprah news was announced on November 6th.


Chart courtesy of Finscreener

What’s Next - Bull Case

Several weeks following Oprah’s partnership announcement, shares moved 14 percent higher after she tweeted a 60-second video commercial for the company. Hudson’s campaign is set to go live in the week between Christmas and New Year.

Shortly after the 2015 announcement, Craig-Hallum reiterated its Outperform rating and raised its price target on the stock from $10 to $20, Barclays upgraded the stock from underweight to equal-weight and raised its price target from $5 to $14.

Currently, eight analysts rate WW a strong buy, while two rate the stock a hold, according to Finscreener. Analyst rating and price target changes may be an additional catalyst for WW share movement.


Data courtesy of Finscreener.

What’s Next - Bear Case

Oprah may be losing interest in WW according to a New York Post article published Thursday night despite her agreement with the company lasting through 2020. Shares fell 3.97 percent Friday.

According to the report, Oprah has been significantly less present than usual in WW marketing and spent more time on other businesses, including her own healthy eating brand. On March 7th, 2018, Oprah sold 2.36 million shares of WW, but stated, “I am deeply committed to Weight Watchers and continue to see a bright future for the company.”

Some are speculating Hudson may be stepping in to serve as a replacement for Winfrey. An announcement that Winfrey will no longer be involved in the company would almost certainly hurt the stock.

The press release announcing Hudson’s involvement says she will appear alongside Oprah in future marketing campaigns.

Shares of WTW are trading down 0.5 percent as of late Monday morning.

Finscreener is a content partner of Benzinga

Photo credit: Greg Hernandez (Oprah Winfrey at 2011 TCA) [CC BY 2.0]

Posted In: FinscreenerOprahWeight WatchersWWLong IdeasNewsShort IdeasTrading IdeasGeneral

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.