Shares of the weight loss company soared on word media maven Oprah Winfrey is buying a 10 percent stake and joining its board. Fred Katayama reports.
Book readers give a lot of weight to what Oprah Winfrey likes, and now, investors do, too. The media maven joined the Weight Watchers weight loss program as its website proudly crowed, and she's buying a 10 percent stake in the company. That'll make her the company's third largest shareholder, and she'll have the option to buy another five percent. Oprah is also joining the board. Oprah said, "I believe in the program so much I decided to invest in the company .." Investors bought in, sending Weight Watchers' beleaguered shares skyward. Weight Watchers' shares, down 73 percent this year, have been on an upswing since summer. That's when the company raised its outlook, saying membership recruitment has finally begun to improve. Morningstar analyst R.J. Hottovy said, "We haven't seen this level of commitment and credibility before. It's quite different from other celebrity endorsements in the past. But there's still a lot of potential headwinds against the company." The company has had problems attracting new members, especially in an era when it has to compete against weight loss apps and devices like Fitbit and Apple Watch that the younger generation favors. The popular talk show host has been open about her struggles with her health. Investors now betting that her words carry weight.