Shares of WW International (WW +0.00%), 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.
OTC: WW
Key Data Points
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.
