Weight Watchers Synopsis
Weight Watcher's stock was trading flat/negatively all of 2016. The stock had been trading/valued based on negative views on the company's subscriber and product revenues. Given that Weight Watchers had suffered over 20 consecutive quarters of revenue declines, the consensus view on Weight Watchers' revenue growth was very negative. Short interest was also astronomical; the short shares as a % of free float was more than 60%.
In order to better understand the subscriber and product revenue trends, we conducted the following investigative tasks:
Held in-depth conversations with management
Performed statistically significant surveys of Weight Watchers locations across the country and in the UK
Performed regression analysis on Google Trends data and digital media impressions to assess engagement after Weight Watchers launched "Beyond the Scale" in Winter 2016
The results of our research corroborated management's claim that Beyond the Scale was the much needed answer to Weight Watchers' competitive strategy. The company's strong earnings and guidance beat on 2/28/17 was the catalyst that caused the consensus to reevaluate their expectations for Weight Watchers' subscriber and product revenue growth trends. In addition to a stark shift in sentiment, a major short squeeze also ensued.