‘Oprah effect’ wears off as Weight Watchers sinks
Oprah Winfrey’s halo effect on Weight Watchers is disappearing fast.
The media mogul and 10% owner of Weight Watchers has seen $117 million in wealth vanish as shares of the company have crashed 66% from their high notched in November 2015 on enthusiasm over her involvement with the company.
Shares of Weight Watchers were down another 68 cents, or 6.6%, to $9.68 Tuesday after the company said it is replacing its CEO. The value of the company has dropped $1.2 billion in value since the peak hit after Winfrey came on board.
Reality is setting in now as things haven’t worked out as many investors hoped after Winfrey formed close professional ties with the company in October 2015.
The stock is still above the $6.79 a share it traded for before Winfrey took her stake and became the third-largest investor. But the level of enthusiasm is proving in hindsight to have been overdone. The company’s revenue during the just-completed secondquarter of $309.8 million is flat with a year ago, although profit is up 9.3%. The company lost $10.8 million in the first quarter.
Winfrey is now using her posi- tion on the board to push for management changes. Late Monday, the company said it will replace the CEO of three years as of Sept. 30, James Chambers, the same chief executive who was running the company when Winfrey joined.
Shares of Weight Watchers more than doubled to $13.92 a share the day Winfrey announced in mid- October 2015 she was more closely associating herself with the weight-loss company, including buying 10% of the company’s stock and joining the board.
Shares soared 169% in just two days to $18.25 after the announcement of Oprah’s involvement on Oct. 19, 2015, turning into a tidy two-day profit for Winfrey of $73 million.
That doesn’t include the paper gains from 3.5 million additional shares she could buy by exercising options.
The enthusiasm for the company continued up until November 2015 when the stock hit its high of $28.05 a share.
All told, the value of Weight Watchers soared $1.4 billion in the months following Winfrey’s involvement.
Winfrey has lost $117M on paper.