Weight Watchers weighed down by fallout from ‘GLP-1 House’ (WW)
Weight Watchers (NASDAQ:WW) is losing ground for a second day as the fallout from the “Weight Watchers GLP-1 House” continues to weigh on the stock.
Shares are down 8.5% on Wednesday following a 6.8% drop on Tuesday.
The company sponsored a marketing campaign in which influencers would gather and talk about their experiences with weight-loss drugs like Wegovy and Mounjaro to promote Weight Watcher’s Sequence weight loss program.
According to Bloomberg, the company approached social media influencers to “bust the misconceptions and stigma around GLP-1 medications” and to bring attention to new weight loss programs at Weight Watchers (WW).
However, many of the individuals approached by the company had never tried GLP-1 medications and had unpleasant experiences with Weight Watchers’ (WW) approach to dieting. According to one woman cited by Bloomberg who was offered $750 by Weight Watchers to endorse the GLP-1 program, “They asked me to promote a product I’d never tried.”
The disclosure has resulted in shares losing 15% in value over just the past two days.
Last March, Weight Watchers (WW) jumped on the Ozempic-mania and paid $106M for telehealth provider Sequence. The Sequence platform allows customers to consult with a doctor who could prescribe weight loss drugs if appropriate.
The acquisition moved Weight Watchers (WW) in a new direction, capitalizing on the popularity of obesity drugs typically prescribed to maintain healthy glucose levels for Type-2 diabetics. The acquisition shot Weight Watchers’ (WW) shares higher and continued to fuel gains in the stock until peaking at $13.31 in November.
Since then, the increased availability of weight-loss drugs along with competition from Eli Lilly’s (LLY) LillyDirect have contributed to Weight Watchers (WW) reversing all of its gains on the Sequence acquisition.
Last quarter, the company reported an 8% drop in subscription revenue and lowered its 2023 revenue and earnings guidance.
Weight Watchers (WW) reports Q4 results on Feb. 28, expected to report an adjusted loss of $0.09 per share on $206.9M in revenue. This compares to Q3 results that included a profit of $0.06 on $214.9M in revenue.
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