Weight Watchers Stock Drops -30% After Low Guidance

Weight Watchers International, Inc. (NASDAQ:WTW) took a huge stock hit today, after reporting its full-year 2018 results and 2019 guidance. WTW stock is down over -30% today and its stock has been steadily dropping since July 2018. In the last six months, the weight management stock has dropped over -70%. Why has it dropped so much and why are investors backing out now?

Let’s find out!

Weight Watchers Stock Falls

The weight management stock started off 2018 strong, launching its new WW Freestyle. The program was designed to be the company’s most flexible and liveable program ever. The new program kicked off well, and the company reported positive earnings in Q1, Q2, and Q3. Despite the positive earnings, the stock began to decline in July.

The company tried various different ways to boost investor confidence in the last six months, from WellnessWins, a member rewards program aiming to inspire health habits, to the release of a new Weight Watchers cookbook.

Oprah Winfrey has been a brand ambassador for Weight Watchers for years, but last year the WW pitchwoman’s role got significantly smaller as she worked on other ventures. Some analysts believe that this could very well be the reason investors continued to sell WTW. In December, the weight management company added Kate Hudson as a new brand ambassador, but it didn’t help the company much. Still, Weight Watchers continues to have positive revenue growth despite its dropping stock.

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2018 Earnings Report

The press release released by Weight Watchers after the bell yesterday highlights that its end of period subscribers is up +22% year-over-year. Its revenue from Q4 2018 was $330 million, up 6% year-over-year.

For its FY 2019 guidance, Weight Watchers anticipates revenue of $1.4 billion and an EPS range of $1.25 to $150.

Mindy Grossman, CEO of WW, said:

“While we are disappointed with our start to 2019, we are confident that our strategy to focus on providing holistic wellness solutions leveraging our best-in-class weight management program is the right path to support long-term sustainable growth.”

Grossman says that Oprah Winfrey will be the central role in its marketing campaign for Spring. Despite the news of a bigger marketing role for Oprah in the spring, it seems investors are still unimpressed with the stock.