WW International stock (NASDAQ: WW) has declined by close to 40% year-to-date to levels of around $10 per share, with the stock now trading at almost 75% below its 2021 highs. The reasons for the decline are quite straightforward. Investors started valuing WW as a technology stock, as it posted big growth in its digital business – which relies on mobile apps to provide weight management services – through Covid-19. However, the digital operations have fared badly in recent quarters, with digital subscriber numbers declining 7% year-over-year to about 3.4 million over Q4 2021. As the digital business declines, investors have likely re-rated WW stock lower. Moreover, the weight management and fitness space, in general, has become very competitive. There are a slew of new-age weight management apps as well as a growing number of independent experts on YouTube and other social media platforms, making WW’s value proposition less compelling. Over Q4 2021, WW International’s revenue declined 14.7% year-over-year to $276 million, missing Street estimates.
So is WW International stock still worth looking at after this big sell-off? Although consensus estimates point to a decline in revenue through 2022, as the big health and fitness focus seen through the Covid-19 lockdowns likely cools off, WW is taking a couple of steps to revive its business. The company is looking to build a diabetes-focused business, with a dedicated offering with specific content and coaching for people with chronic disease, by later this year. WW is also rolling out a program called PersonalPoints, which completely customizes weight loss plans for each member. Following the big sell-off, WW stock trades at just about 9x 2022 consensus EPS. At these valuations, the risk-to-reward trade-off for WW stock appears quite favorable. Moreover, with the U.S. Fed looking at more substantial interest rate hikes for 2022, it’s very possible that value stocks, including WW, could gain some traction. We value WW stock at about $17 per share, meaningfully ahead of the current market price. See our analysis WW International Valuation: Expensive or Cheap for more details on WW’s valuation and comparison with peers. Check out our analysis on WW International Revenue: How does WW Make Money for an overview of WW’s business model, key revenues streams, and how they have been trending.
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|S&P 500 Return||0%||-5%||103%|
|Trefis Multi-Strategy Portfolio||0%||-8%||262%|
 Month-to-date and year-to-date as of 4/11/2022
 Cumulative total returns since the end of 2016