Updated 11:35am ET, Feb. 23: Remarks about GLP-1 use attributed to sources cited by Bloomberg.
WW International (NASDAQ:WW) is losing ground for a second day as the fallout from the “WeightWatchers 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 WeightWatcher’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 WW International (WW).
However, many of the individuals approached by the company had never tried GLP-1 medications and had unpleasant experiences with WeightWatchers’ approach to dieting, Bloomberg said. According to one woman cited by Bloomberg who was offered $750 by WeightWatchers to endorse the GLP-1 program, “They asked me to promote a product I’d never tried.”
The disclosure likely contributed to shares losing 15% in value over just the past two days.
Last March, WeightWatchers 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 WeightWatchers 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 WeightWatchers’ 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 WeightWatchers 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.
WW International (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.