WW International had its worst month on record in January, erasing the wellness company’s gains since March when it announced it would enter the growing market for a new class of weight loss drugs.
WW, better known as WeightWatchers, fell 6.1% on Wednesday, taking its decline this month to 57% amid concerns about new competition and subscriber growth. The decline came as part of a broader market selloff Wednesday after Federal Reserve Chairman Jerome Powell suggested officials were in no hurry to cut interest rates.
This performance is a clear reversal from 2023. Stocks posted their biggest single-day increase since 2015 on March 7 after WW signed a deal with Sequence, a telemedicine obesity drug provider. Enthusiasm for the deal and its potential to turn around WW’s business has helped push the stock price up 127% in the last year.
January’s economic downturn was primarily caused by Eli Lilly and Co.’s launch of an initiative earlier in the month to sell weight loss drugs directly to the public, threatening a key growth area for WW.
Some Wall Street analysts are concerned about potential signs that demand for WW subscriptions is fading.
Alex Furman, an analyst at Craig Hulme Capital Group LLC, warned this week that consumer interest in traditional weight loss companies is “significantly down” compared to last year. Furman said in his research note that WW app downloads and web traffic on the company’s Android devices declined in early 2024. He warned that Noom Inc., the weight-loss startup, has similar weak trends.
Indeed, DA Davidson & Co.’s Linda Bolton Weiser said WW warned in December that Sequence’s integration into the app could introduce noise into third-party data.
“Investors are very concerned about app download data,” she says. “Trends appear to have changed, but on the other hand, the data may be skewed.”
He said a subscriber update on WW’s fourth-quarter earnings in March will reveal whether app download data accurately represents recent trends.
“Longer term, WeightWatchers remains well-positioned to capture major market share in this space,” she said. “They have brand equity, and no one else really has it in the weight loss space.”
Among analysts tracked by Bloomberg, WW has four buy ratings, three hold ratings, and one sell rating. Analysts’ average price target of $11 means the stock is expected to return approximately 191% over the next 12 months.