Multimedia mogul Oprah Winfrey has bought a 10 percent stake in Weight Watchers (WTW) to help change the weight loss firm's floundering fortune.
Weight Watchers announced on Monday, Oct. 19, that its stocks shot up after Winfrey's investment. The billionaire TV icon is reportedly set to receive an option to buy an additional five percent stake in WTW and join the diet company's board as well.
Following the acquisition, WTW also revealed its plan to expand its brand to provide clients with happier and healthier living in addition to its weight loss programs.
"Weight Watchers has given me the tools to begin to make the lasting shift that I and so many of us who are struggling with weight have longed for," Winfrey said.
"I believe in the program so much I decided to invest in the company and partner in its evolution."
Weight Watchers' stocks soared by 105 percent and ended at $13.92 when trading closed on Monday. Before news of Winfrey's investment became public, WTW had lost around 73 percent of its stock value this year.
According to a filing at the Securities and Exchange Commission (SEC), Winfrey acquired her stocks at WTW for $6.79 for each share, making her total investment worth $43.2 million.
Market experts believe Winfrey will use her brand and multimedia expertise, including her advocacy of promoting health-related programs to help increase public interest in WTW's meetings and product line.
Efraim Levy, an analyst for S&P Capital IQ, said that Winfrey's support of Weight Watchers will not only drive interest in its stock but also help increase the diet company's sales and profit with her media-savvy skills and free publicity methods.
While some market analysts are optimistic about Winfrey's WTW investment, others have expressed concern that the news diverts attention from the company's primary issues.
Weight Watchers has dealt with controversies regarding its diet program's long-term track record. The company is also facing strict competition due to the rise in the number of free health-related apps and the change in the public's attitudes toward wellness, which will drive them to switch to alternative programs.
"Weight Watchers has some significant business challenges that will not be solved alone - by even the most resolute celebrity," Jeetendr Sehdev, a marketing professor at the University of Southern California, said.
Some experts are also skeptical that Winfrey's belief in Weight Watchers' products will be enough to guarantee success for the diet company.
"Regardless of how much Ms. Winfrey contributes to the marketing of Weight Watchers, a well-designed new program is necessary for the company's success," said Meredith Adler, an analyst for Barclays.
