A day after Oprah Winfrey made a splash on Wall Street by purchasing 10% of Weight Watchers (WTW), the media is (once again) marveling at the “Oprah Effect.” For example, USA TODAY asked, “Does everything she touch turn to gold?”
After a celebrated run as a journalist and talk-show host, Oprah has also launched authors into the bestseller lists, earned Academy Award nominations for her performances in The Color Purple and Lee Daniels’ The Butler, introduced the world to Dr.’s Phil and Oz, and currently sits at the helm of both a cable network and a magazine.
Obviously looking for something to do, Oprah revealed on Monday that she had invested $43.2 million in a 10% share of Weight Watchers (with the rights to buy 5% more), and she will join the board of the company. A change in direction for the weight-loss company is promised, with a new focus on health and happiness to be developed with Oprah’s assistance. Shares of the company instantly soared, going up more than 116%, as investors wanted to share in the “Oprah Effect.”Learn how you could profit off market news at a Live Equities Webinar
This, of course, is a rare equities story. Only Oprah has the “Oprah Effect,” and it is hard to think of any other celebrity who could have this powerful influence on a company and its stock price. That Oprah herself has publicly struggled with weight loss made her connection with Weight Watchers even stronger, but the company’s recent competition with online and even wearable weight loss tools (like Fitbit) does not make WTW a long-term sure thing.
It will be interesting to watch WTW over the next few weeks to see how persistent the Oprah Effect can be for the company. It seems the idea is to transform Weight Watchers from a weight-loss leader into a lifestyle choice, which may in fact keep WTW in the buy column after the Winfrey media frenzy dies down. However, since we’re talking about Oprah, it’s possible this is just the beginning for big Weight Watchers news.
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