Down 60% This Year, Is WW International Stock Finally Worth A Look?

WW: WW International logo
WW International

WW International stock (NASDAQ:WW) has seen a big sell-off this year, declining by about 58% year-to-date to levels of around $7 per share. There are a couple of factors weighing the stock down. Demand for WW’s services is easing, as the big health and fitness focus seen through the Covid-19 lockdowns cools off and people head back outdoors. Over Q1 2022, revenues declined by about 10%, with the digital business, which relies on mobile apps to provide weight management services, also losing steam. Digital subscribers fell by 10% year-over-year to 4.5 million. This is problematic, as the rapid growth of this business earlier in the pandemic made investors value WW with higher multiples, much like a technology stock. Now with the digital business shrinking and WW’s core studio business seeing little traction, investors have re-rated WW stock lower.

So is WW International stock still worth looking at after this big sell-off? While WW is taking some steps to shore up its revenues, as it looks to build a diabetes-focused business, while also rolling out a program called PersonalPoints, which completely customizes weight loss plans for each member, the industry is getting more competitive.  People have a slew of weight management options to choose from now ranging from new-age, AI-driven weight management application on one end, to independent experts on YouTube and social media. This will weigh on WW, which has been in the business for almost six decades.

However, the risk-to-reward trade-off for WW stock appears favorable post the big sell-off, with the stock now down by over 80% from 2021 highs.  At the current market price of $7 per share, WW trades just about 6.5x consensus 2022 earnings.  Moreover, with the U.S. Fed getting more aggressive with rate hikes to fight surging inflation, investors could increase exposure to value stocks given the margin of safety in terms of stronger earnings yields. We value WW stock at about $15 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 revenue streams, and how they have been trending.

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With the broader market sell-off and declining demand for weight management services, WW has fallen 58% this year. Can it drop more? See how low can WW International stock go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Jul 2022
MTD [1]
YTD [1]
Total [2]
 WW Return 9% -57% -39%
 S&P 500 Return 3% -18% 74%
 Trefis Multi-Strategy Portfolio 6% -18% 221%

[1] Month-to-date and year-to-date as of 7/11/2022
[2] Cumulative total returns since the end of 2016

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