Oprah Winfrey and Weight Watchers

Back in 2015 Oprah Winfrey famously acquired a 10% stake in Weight Watchers for an outlay of $43 million. Fast forward to 2018 and Oprah Winfrey has sold a 2.5% stake in Weight Watchers for around $110 million. The stock has increased from around six dollars up to $60 since Oprah Winfrey came on board and while some have been commenting on her 2.5% share sale, she still retains a 7.5% stake in the company worth in excess of $300 million.

Putting her money where her mouth is

Oprah Winfrey signed up as a spokesperson for Weight Watchers back in 2015 after she bought a 10% stake in the company. It was common knowledge that she had an array of ideas for the company and believed that a significant shakeup would release significant value going forward. The fact that the shares have increased in value by 10 times since 2015 sums up her success. Historically, many so-called celebrity investors have jumped aboard companies purely and simply as a means of feathering their own nest. However, while Oprah Winfrey has seen her $43 million investment increase to in excess of $400 million, this is just a fraction of the money made by long-term investors in Weight Watchers.

Oprah Winfrey and Weight Watchers

More than just a name

Changes to the way in which Weight Watchers operate, a higher profile because of Oprah Winfrey and focus on Weight Watchers meals have created this perfect storm. It is fair to say that the company was floundering before Oprah Winfrey acquired her stake and it is fair to say that her presence, ideas and enthusiasm have made a massive difference over the last three years.

It is also worth noting that while she has cashed in around $110 million worth of shares she still retains a relatively large holding going forward. The recent weakness in the share price can now be explained by behind-the-scenes moves to sell 2 million shares in the company. How the shares will perform in the short to medium term remains to be seen but many believe that prospects are still extremely positive. Criticism of the partial stake sale is unfair as she could have cashed in the lot, made a big profit and simply walked away. She chose not to, what does this say?

Profile is everything

It is fair to say that Weight Watchers had lost its way in recent times before the emergence of Oprah Winfrey as a significant shareholder. The brand name was looking tired and in need of a revamp and overhaul. Even though Oprah Winfrey has made a major difference to the company’s profile it is worth noting that even in its darkest days Weight Watchers was still recognised as the leading dieting company. Quite what it stood for was a little confusing as ventures into different areas had not always been successful.

The company is now at a stage when it may well be looking to add acquisitions to the group to both expand going forward and reduce dependence on a small group of income streams. There is no doubt that Oprah Winfrey will be offering advice and guidance as we speak and there is nothing better than working with somebody who also has a financial interest in the group. Token gesture celebrity directors, paid relatively large salaries to work for a company, do not offer anywhere near the same kind of value as those willing to put their own funds at risk.

Leave a Reply