Should you bet against Oprah?

I was skeptical when $WTW, the Weight Watchers stock, surged early today after the company reported very optimistic projections for future growth. The cynic in me must always question a rally. I noticed that the market shrugged off the fact that Weight Watchers actually missed revenue expectations despite growing subscribers by 10%. However, after reading more about their newest member to the Board, I’ve come to respect the clout that Oprah may bring to win more subscribers.

Sure subscribers are up in the fourth quarter. It was the holiday season. But I can appreciate now, during after hours, that there should be another bump in this first quarter thanks to New Year’s resolutions. I’ve seen the new 2017 Oprah commercials. Guiding higher for the next report is a great seasonal play that may (or may not) play out for shareholders.

The next thing on my mind about this stock this morning was the insider risk posed by Oprah’s celebrity owning a piece of the company. Smaller investors should watch if Oprah exercises those options or not. That would be quite an increase in demand.  I actually thought Oprah might unload stock. But I was reminded by MarketWatch that Oprah just might acquire more stocks, not less.

…keep in mind that when the company disclosed in October 2015 that Winfrey bought about 6.4 million shares at $6.79 a share, the company also said it granted her options to buy another 3.5 million shares at an exercise price of $6.97.

So the insider risk actually leans favorable for smaller shareholders.

My conclusion this morning was to sell $WTW at $20 and be done with it. But if I think more like a trader, I have to ask if $WTW is still a good value now below $20. Will it return to $80? I don’t know. But can it return to $28? Let’s just say that I do believe Oprah could win the presidency.


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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