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It seems like bets against Weight Watchers International have spiked following an investment done by media mogul Oprah Winfrey that made the troubled diet brand's shares double. The lending data from SunGard's Astec Analytics has suggested that the shares of Weight Watchers, after borrowing in, have jumped 25% previous week after the celebrity said that she was going to buy 10% of the company.
Astec Analytics provides a strong glimpse into short-selling activity. Short sellers borrow shares and sell them with a hope to purchase them back later for less to give it back to the lender.
Weight Watchers has been a favorite of short sellers in recent years. It is facing a shift by consumers to free calorie-counting apps on smartphones and fitness tracking devices from companies such as Fitbit.
The news of Winfrey investing in Weight Watchers on October 19 led the company’s shares to rally 150% over five days, even as a forthcoming quarterly report is likely to show a double-digit sales decline.
In a report on Wednesday, SunGard said that though the cash market appears to attribute paranormal stock-picking powers to Oprah, short sellers have been apparently quite cautious.
Now, Weight Watchers is trading at 29 times expected earnings, pricey in comparison to rival Nutrisystem at 21 times earnings.
The active online subscribers have declined a fifth from a four-year high past March. With Winfrey's frankness over her decades-long struggle with weight loss could help revive the brand.