Weight Watchers stock price shrinks in wake of earnings report – USA TODAY

8 months ago Comments Off on Weight Watchers stock price shrinks in wake of earnings report – USA TODAY

Shares in Weight Watchers (WTW) went on a crash diet Friday, falling more than 26% in midday trading, after the diet company said it expects a quarterly loss.

One of the biggest losers is Oprah Winfrey, the entertainment superstar who lit up the stock recently when took a stake of 6.3 million shares. The drop had cost her about $27 million as of midday. But even Winfrey hit as bad as an investment firm based in Belgium that was seeing losses piling up that exceed $125 million.

Weight Watchers shares plunged 27%, falling $4.26 in midday trading to $11.29. In a call with investors, the company’s chief financial officer, Nicholas Hotchkin, blamed marketing and “winter-season” expenses as factors leading to an expected first-quarter loss of 20 cents a share. He also said membership was down coming into the new year.

The earnings report marked a sharp turnaround from the October, when billionaire mogul Winfrey — who has had very public ups and downs with her weight over the years — came aboard. The stock price doubled on the news. She took a 10% stake – with options to purchase 5% more.

When Winfrey tweeted a video last month saying that thanks to Weight Watchers, she had whittled away 26 pounds even while eating bread every day, shares leaped more than 20%.

Despite the steep stock drop, at least one analyst said that he was heartened by the company’s financial projections and progress.

“The market may have been looking for a more pronounced ‘Oprah effect’ in 2016, likely explaining today’s pullback,’’ R.J. Hottovy, an analyst with Morningstar, said in an investors note Friday. But the full year projections of revenue growth in the low single digits, and adjusted earnings per share between .70 and $1.00 “is consistent with our expectations for a more gradual recovery. This guidance strikes us as realistic when factoring in structural industry changes, including mobile apps and other technologies disrupting industry wide pricing power.’’

He added that “we see encouraging signs, including strong reception to Oprah Winfrey-led marketing efforts, “Beyond the Scale,’’ platform enhancement, and increased levels of digital engagement. We’ve consistently stated that 2016 will be a transitional year for Weight Watcher and that it will take time to build consumer awareness of recent platform changes.’’

Weight Watchers stock price shrinks in wake of earnings report – USA TODAY

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