Shares of WW International (WW 10.06%), the parent of WeightWatchers, were falling again today as concerns about pressure from GLP-1 drugs like Ozempic continue to push the stock lower. The catalyst for today's slide seemed to be a short report from Cedar Grove Captial Management.
As a result, the stock was down 17.1% as of 12:55 p.m. ET.
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WeightWatchers stock keeps losing weight
Cedar Grove's short thesis seems to center around WW International's recent decision to begin offering GLP-1 drugs like Ozempic to their customers. Last month, WeightWatchers said it would offer "tailored behavioral support" for customers taking a GLP-1 medication.
To skeptics like Cedar Grove, that's a sign that WeightWatchers is fighting a losing battle. As the short-seller observes, WW's revenue has been declining steadily since 2018, and short-seller Paul Cerro argues that last year's acquisition of Sequence, an online weight-loss program that provides medication like GLP-1 drugs, was overpriced and is evidence that WW doesn't have a moat in weight-loss management.
Additionally, Mounjaro-owner Eli Lilly's decision to launch its own weight-loss program earlier this month has helped send WW stock spiraling this year.
What's next for WeightWatchers?
Cedar Grove's core argument makes sense. The more that weight loss moves toward GLP-1 drugs, the more it undermines the need for WeightWatchers to exist. If most dieters are content to take GLP-1 drugs based on a plan with their doctor or an alternative telehealth service, then WeightWatchers will struggle.
However, the company still has significant brand equity and may be able to leverage that in a different direction, as it tried to do with its new focus on wellness. The business is clearly struggling at this moment, but it's too early in the GLP-1 evolution to call it a lost cause. Still, I would tread carefully at this juncture as sentiment toward the stock is increasingly negative.
