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Weight Watchers shares were the top hit of the week.
Monday 16 November 2015
One woman has more influence than the whole of Wall Street in the United States: Oprah Winfrey. As a well known media figure and multi-millionaire she can really influence the market price of Weight Watchers stock. A prime example of how the stock market really works.
In my previous blog of November 3 2015. “An exciting week for investors, there is plenty to choose" I referred to the movement in Weight Watchers share price and wrote: “A wonderful market indeed. What opportunities there are. You do not only make money with the major stock market indices. No the week has shown the following: Keep a sharp lookout for the solid investments” It could not have been said any better.
In the past week on Wall Street the share price of Weight Watchers (ticker symbol: WTW ) was once again the outstanding highlight. The share price held up exceptionally well against the market trend this week and climbed to new heights.
I mentioned in the above blog the importance of Oprah Winfrey's entry. A fact which investors were left with to deal with. The Oprah Winfrey effect:
After years of being in a downward trend, the price of USD 15, - doubled after it was announced that she bought a 10% stake of Weight Watchers' share capital.
The stock market now expects an early end to this price explosion. It was dismissed by financiers in New York as a flash in the pan, and the lady from California was ridiculed.
In addition, Weight Watchers produced shockingly poor financial results last week: Declining membership numbers, fewer sales and reduced profits. Most investors do not trust the numbers and were expecting a downward correction. Maybe to USD 6, - but at least to USD 10, -. But what happened? Wall Street brokers were wrong. The price of the stock continued to rise from USD 15, - and closed on Friday at $ 24, -. And this in a market week where most share prices sank . An increase of 60% since the discussion in my blog!
We have arrived in a new era. The power and probably also the capabilities of Oprah Winfrey as the most successful American media entrepreneur were obviously underestimated. In addition she has taken a seat on the board of Weight Watchers with her 10% equity stake. This is significant. It will be very exciting in coming months to see what influence she can exert. The brand "Weight Watchers" is famous around the world, but the business model is outdated. The theme "Health hazards caused by being overweight" is now globally more relevant than ever. How will Oprah Winfrey help develop this further?
Oprah Winfrey is known for her modern management style, which deliberately sets itself apart from the style adopted by large corporations. Her biggest advantage - in addition to her media personality - is her gift to think "ahead" and set new trends.
Her cooperation with Deepak Chopra, the leading spiritual teacher in the United States is, for example, mentioned here. I believe one should closely follow further developments in Weight Watchers stock.
What can one generally learn from this case - study "Weight Watchers and Oprah Winfrey"?
- Successful stockbrokers must think outside the box. It is not enough to only care for the financial section of the newspaper or for financial accounts. I have said this for years: Value investors of the old school, who only look at earnings, price to book value ratios and balance sheets, etc., have become obsolete. This is no longer the right assessment of a position. Today in addition we suggest: read broadly, explore new areas that have at first sight nothing to do with investing, travel, constantly expand your education, so you can correctly deal with new trends.
- On the stock exchange people always look to the future. Share price discount the events of the next six months. So, do not look at results from yesterday, but make the correcr assessment of the future - that is what matters. For example Weight Watchers - Oprah Winfrey there is a lot to learn.