WW International (WW 10.06%), also known as Weight Watchers, has quietly been one of the most volatile stocks in recent years. It's shot up and down on news around Oprah Winfrey taking a stake in the company and as various threats have emerged to its weight loss program, including new GLP-1 drugs.
In recent years, Weight Watchers stock fell sharply. But last time the stock was this low, it jumped 2,000% in just a few years, though it soon crashed after that.
So is this sell-off a buying opportunity, or is this a broken stock? Let's take a look at the buy, sell, and hold cases for Weight Watchers today.
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Buy Weight Watchers stock
The weight loss landscape is constantly changing, but Weight Watchers has been a leading brand in the industry for well over a generation and has a level of brand equity that is hard for a competitor to match.
On a similar note, the company's shown its ability to stay relevant, by adding digital features and updating its nutrition and weight-loss model to stay current with modern standards. It also still has Oprah Winfrey -- arguably the best-known dieter of the last generation and a powerful influencer with WW's target audience -- in its corner.
Winfrey owns approximately a 10% stake in Weight Watchers and is on the company's board. Winfrey, herself, arguably has the power to reinvigorate the brand, as an ad campaign or promotion starring her would likely give the stock a boost and attract more subscribers to Weight Watchers. Past efforts from Winfrey yielded similar jumps in the stock.
Additionally, the stock is cheap compared to its historic levels, setting it up for a recovery if it gets some good news.
Sell Weight Watchers stock
Weight Watchers stock is down for a reason. The company is clearly facing pressure from Ozempic and related drugs as weight-loss habits are shifting from traditional dieting.
Nearly a year ago, WW acquired a telehealth company, Sequence, to help prescribe drugs like the GLP-1 family, but controversy has swirled since. Winfrey first denigrated the weight loss drugs before reversing her position and endorsing them in late 2023, giving cover to Weight Watchers, which has started to promote the drugs itself.
However, Weight Watchers doesn't have any competitive advantage in weight loss drugs, and customers can get those drugs from their doctor or another provider.
Weight Watchers' most recent results also don't inspire much confidence. In its third quarter, revenue fell 14% to $215 million, and adjusted operating profit fell 41% to $36.6 million. WW did post growth in subscribers, up 6% to 4 million, but the decline in revenue shows that those subscribers are not paying as much as they were a year ago. However, the company expected that to decline to 3.7 million due to seasonal trends.
Hold Weight Watchers stock
A lot has changed at Weight Watchers in the last year. The company acquired Sequence. GLP-1 drugs have emerged as a significant challenge, and it's embraced the new weight loss drugs as part of its future.
However, there are questions about whether Weight Watchers can change into a telehealth company and retain its core value propositions of offering a diet system and support groups. Investors may want to wait a few quarters to see how Weight Watchers' pivot to telehealth and weight loss drugs plays out before deciding whether to buy the stock.
The verdict: Hold Weight Watchers
While major growth seems to be unlikely for Weight Watchers, it won't take much for the stock to gain from here. A better-than-expected earnings report in the fourth quarter could do just that.
WW subscribers might prefer to access Ozempic and related drugs through a familiar brand like Weight Watchers, or they might find it useful to pair taking those drugs with traditional Weight Watchers weight-loss methods.
Its digital model should also add leverage if the company can deliver solid subscriber growth, but it still needs to execute on it. Weight Watchers stock could continue to drift lower, but it's too soon to give up on it. There's still significant upside here if it can surprise the market.
