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Weight Watchers gets crushed by keto



Actions of WW (WTW) – The new name of Weight Watchers – closed down 34% Wednesday after the company shocked Wall Street with poor revenue and sales.

CEO Mindy Grossman blamed this problem on the keto diet, a popular diet that makes bread and other carbohydrates taboo. During a phone conversation with analysts on Tuesday, she said that the keto was "becoming a cultural medium" and that she even called it a "surge of keto".

Wall Street is clearly nervous too.

JPMorgan analyst, Christina Brathwaite, downgraded the stock to "underperform" last week and reduced her price target. One of the reasons? She worried about competing rival weight loss service, Diet Doctor, who is a keto supporter.

Falling shares also hurt Winfrey, the group's second largest shareholder. She bought 6.4 million shares of WW in October 2015 – a stake valued at $ 43 million at the time. At the height of its stock value last July, its investment would have been worth about half a billion dollars, which represents a sale that she made of an action last March.

Since this July summit, WW shares have lost more than 80% of their value.

Grossman pointed out that WW will not change strategy simply because a new scheme is popular.

"Everyone in the diet is looking for the quick fix – we have already experienced this before and we know that we are the program that works," Grossman said.


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