Reviving momentum in the spotlight

WW International Inc. NASDAQ: WW (WeightWatchers) has had a disastrous 2024, with its shares plunging 66.7% year to date (YTD). The company made a laudable strategic pivot in 2023, acquiring Sequence Inc. to enter the GLP-1 clinical weight loss business, gaining the ability to prescribe drugs such as Novo Nordisk A/V NYSE: NVO owned Ozempic and Wegovy and Eli Lilly & Co. NYSE: LLY GLP-1 agonists such as Mounjaro and Zepbound. The forward-thinking move complemented its struggling WeightWatchers business.

WeightWatchers stock rises and slides

Shares jumped toward Goldman Sachs’ $13 price target, which was raised from $3.80. Incidentally, Weight Watchers hit its target price, hitting $13.31 in October 2023 before plummeting to an all-time low of $2.79 following the disappointing Q4 2023 earnings release. Furthermore, its famous director, Oprah Winfrey, who lost over 60 pounds on GLP-1 drugs, has decided not to seek re-election to its board of directors. Investors are left to ponder whether Weightwatchers will ever regain its appeal.

Leading the trend of the GLP-1 platform

Weight Watchers was one of the first platforms to follow the GLP-1 weight loss trend, which has been embraced by telehealth platforms like Teladoc Health Inc. NYSE:TDOC, Life MD Inc. NASDAQ: LFMD AND His and Hers Inc. NYSE: HIM in the medical sector.

WeightWatchers breakthrough loses shape

On February 28, 2024, Weightwatchers reported fourth-quarter 2023 GAAP EPS loss of $1.11, missing consensus estimates for a loss of 11 cents of $1.00. Revenue continued to decline 7.6% year-over-year to $205.96 million versus consensus estimates of $206.91 million. End-of-period subscribers increased 7.1% to $3.8 million, with 67,000 end-of-period clinical subscribers. Gross margins were adjusted by 60.4% and 61.4%, excluding the net impact of the rate cap. The operating loss was $6 million.

For 2023, WeightWatchers ended the year with 67,000 clinical subscribers, a 47% increase sequentially and a 3x increase when the acquisition of Sequence Inc. was announced in 2023. The combination of behavioral and medical health solutions peso is the new integrated approach to the member experience.

Bearish guidance for WeightWatchers stock

WeightWatchers issued a downward outlook for full-year 2024 for revenue of $830 million to $860 million versus consensus estimates of $924.03. The forecast reflects a $55 million year-over-year headwind resulting from the decision to exit the low-margin consumer products business. The company’s reporting segments will change in 2024, reporting as one segment based on total revenues from North America and internationally.

Oprah steps away from WeightWatchers

Oprah Winfrey has been on the WeightWatchers board of directors since 2015. Her presence was a clear endorsement for the brand. Oprah’s 60-plus pound weight loss using GLP-1 treatments further helped the brand, especially during its strategic pivot to focus on GLP-1 drug prescriptions. However, Oprah stepping down from the board of directors and donating her stock to the National Museum of African American History and Culture suggests the loss of her support for the brand. That’s what the headline reflected as shares plummeted to their lowest levels ever. It also reveals that the actions had a real halo effect on Oprah that she was able to put a floor on, which now seems to have disappeared.

Comments from WeightWatchers CEO

WW International CEO Sima Sistani noted that the restructuring has also recalibrated marketing expenses. They recalibrated most of their spending from Q1 to Q3, when traditionally 40% of annual enrollment occurred in Q1. They will take the same approach in 2024.

Sistani commented: “We are on track to deliver total subscriber growth in 2024, expecting to end the year with 3.8 million to 4.0 million subscribers, including 140,000 to 160,000 subscribers to our new WeightWatchers clinic.” .

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Daily descending triangle

The daily candlestick chart for WW illustrates a descending triangle pattern. The descending upper trendline formed at $3.92 on February 28, 2024, limiting rebound attempts to lower highs. The flat bottomed lower trendline is at the $2.79 low. The daily relative strength index (RSI) has remained flat near the 40 band since the earnings release. The pullback support levels are at $2.79, $2.42, $2.04, and $1.58.

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