WW International stock (NASDAQ: WW) increased more than 65% over the last six months (126 trading days) and currently trades close to $30 per share. Although the company’s studio business faced significant headwinds on account of Covid-19, its digital business is doing well with its digital subscriber base surging by 24% year-over-year in 2020, more than offsetting losses in the studio business. The ongoing shift to a more digital, asset-light business is likely being rewarded by investors. The company’s revenues and earnings are also expected to see some improvement in the coming years. But will WW International’s stock continue its upward trajectory over the coming weeks, or is a correction in the stock looking more likely?
According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data over the last several years, returns for WW stock average close to 9% in the next six-month (126 trading days) period after experiencing a 65% rise over the previous six-month (126 trading days) period. The stock is also likely to outperform the S&P 500 over the next six months, with an expected return that would be 6% higher compared to the S&P500.
But how would these numbers change if you are interested in holding WW stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning to test WW International stock chances of a rise after a fall and vice versa. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!
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MACHINE LEARNING ENGINE – try it yourself:
IF WW stock moved by -5% over five trading days, THEN over the next 21 trading days, WW stock moves an average of 1.6%, which implies an excess return of 0.3% compared to the S&P 500.
More importantly, there is a 49.9% probability of a positive return over the next 21 trading days and a 44.7% percent probability of a positive excess return
Some Fun Scenarios, FAQs & Making Sense of WW Stock Movements:
Question 1: Is the average return for WW International stock higher after a drop?
Consider two situations,
Case 1: Weight Watchers International Inc stock drops by -5% or more in a week
Case 2: Weight Watchers International Inc stock rises by 5% or more in a week
Is the average return for Weight Watchers International Inc stock higher over the subsequent month after Case 1 or Case 2?
WW stock fares better after Case 2, with an average return of 1.6% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 5.7% for Case 2.
In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.
Try the Trefis machine learning engine above to see for yourself how Weight Watchers International Inc stock is likely to behave after any specific gain or loss over a period.
Question 2: Does patience pay?
If you buy and hold Weight Watchers International Inc stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.
Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!
For WW stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:
Question 3: What about the average return after a rise if you wait for a while?
The average return after a rise is understandably lower than a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although WW stock appears to be an exception to this general observation.
WW’s returns over the next N days after a 5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:
It’s pretty powerful to test the trend for yourself for Weight Watchers International Inc stock by changing the inputs in the charts above.
While WW stock may have moved a fair amount, 2020 has also created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how the stock valuation for Herbalife vs. Atlas Air Worldwide Holdings shows a disconnect with their relative operational growth. You can find many such discontinuous pairs here.