Weight Watchers Stock Doubles As Oprah Picks Up A 10% Stake
America has been identified as one of the country’s that is suffering from obesity and this has caused the multi-billion dollar fitness and nutrition industry to grow at a rapid pace during the last few years. Weight Watchers, a company that focuses on dieting and nutrition started out well but during the last couple of years have witnessed a drop in share prices.
Weight Watchers got a lot of attention over the years as it had a format that allowed experts and those looking for help to meet up, share stories, give advice and encourage each other to hit their fitness goals.
The company lost a lot of ground as online weight loss websites started gaining more market share as their digital products allowed them to reach a wider audience.
The total revenue for Weight Watchers in 2011 was around $1.84 billion and the company’s revenue in 2014 dropped to $1.48 billion, which was a decline of around 19%. Weight Watchers has ventured into the online dieting space by launching personal online coaching programs that allow fitness trainers to connect with individuals and work on a personal fitness program.
These initiatives have helped the company recover to a certain extent but their biggest boost and promotion came this month when media mogul and billionaire Oprah Winfrey bought a 10% stake in the company after she tried the Weight Watchers program and found it to be a quality product that gave her the results she wanted. The fact that Oprah purchased 10% of the company and became a part of its board was enough for investors to start buying stock quickly and caused Weight Watches share prices to skyrocket by as much as 86%.
In a statement, Oprah said
Weight Watchers has given me the tools to begin to make the lasting shift that I and so many of us who are struggling with weight have longed for. I believe in the program so much I decided to invest in the company and partner in its evolution.
Oprah paid $6.79 for each share and invested a total of $43.2 million to buy a 10% stake in the company. After her filing was done with the Securities and Exchange Commission, Weight Watcher share prices went up to $12.60.
Weight Watchers and Oprah have worked out a deal where she will not be able to sell any shares during the first two years, be able to sell 15% during her 3rd year, 30% in the 4th year and up to 60% in the 5th year. Once this time frame is completed, she will then have the option of selling all of her shares if she wanted to.
