Dollars, Not Pounds: The Skinny On Oprah’s $558M Weight Watchers Loss

Dollars, Not Pounds: The Skinny On Oprah’s $558M Weight Watchers Loss

Weight Watchers
FILE – In this Wednesday, Oct. 14, 2015 file photo, Oprah Winfrey attends the premiere of the Oprah Winfrey Network’s (OWN) documentary series “Belief” at The TimesCenter in New York. (Photo by Greg Allen/Invision/AP, File)

Oprah Winfrey’s name is synonymous with weight loss. She has spent “literally years on more diets than I care to count,” she says. Over the past eight months, the billionaire media mogul, Weight Watchers shareholder and spokeswoman took a weight-loss hit of a different kind — to her pocketbook.

Oprah is the second largest shareholder in the company.

Shares of Weight Watchers have shed 70 percent of their value after hitting an all-time high of $103.09 in the summer of 2018. Oprah owns 7,524,344 shares — about 11 percent of the shares outstanding, according to her most recent Securities and Exchange Commission filing.

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Analysts aren’t optimistic. J.P Morgan added to Oprah’s woes Tuesday by turning bearish on WW, as the company is now known, MarketWatch reported.

Daily active use of the Weight Watchers website fell 35 percent from the beginning of the second quarter through Feb. 15. There’s growing criticism of poor connectivity and login issues on the Weight Watchers app, Fox News reported. There is also competition from other weight-loss apps such as Noom and dietdoctor.com.

But don’t bring out the violins just yet. Oprah’s Weight Watchers stake is still worth $170 million more than when she first bought it “so she is well in the green there,” according to YahooFinance.

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JP Morgan downgraded Weight Watchers from neutral to underweight based on the decrease of users on the app, and there’s an issue that not enough people committed to lose weight with Weight Watchers at the new year — normally prime time for resolutions to slim down.

“It’s important to note that Weight Watchers rebranded to WW and the whole idea is to ditch the diet which is kind of perplexing to me,” said Yahoo Senior Writer Melody Hahm. “Let’s be honest, people go to WW to diet and that’s why I think there has been a sort of lost path.”

The Oprah effect

Yahoo spoke with the WW CEO Mindy Grossman recently, who said Oprah is still very much involved. However, there may be warning flags, Hahm said. Oprah joined the Weight Watchers board in October 2015 and took a 10-percent stake. She unloaded 2 million shares in March 2018. “It’s perhaps up for grabs that she may continue to sell some of her shares,” Hahm said. “So the Oprah effect perhaps was more fleeting and not necessarily a long-term strategy.”

For investors, the volatility and whiplash they’re experiencing could be comparable to Oprah’s “diet/non-diet and a lot of her love-hate relationship with food,” Hahm said. “That iconic commercial of Weight Watchers where she goes ‘I love bread. Weight Watchers allows me to eat bread.’ — I think … the trend right now is still keto (low-carb) which is all meat.”

As for the daily active use trend, although it has been declining over the last few quarters, it’s still up from a year ago but subscriber growth has been steadily increasing, Hahm said, “although there has been some kind of calibration over the last few months.”

Meanwhile, Noom and Diet Doctor keep gaining market share. “And with apps like Instagram, it has made it very easy where you don’t have to depend on a subscription service at all,” Hahm said. “You can follow individual fitness influencers and you can do it for free. It’s a very competitive landscape.”