Weight Watchers Shares Plunged: What You Need to Know


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of diet specialist Weight Watchers (NYS: WTW) shed some major weight today, losing as much as 23% in intraday trading on heavier-than-average volume.

So what: In no way did Weight Watchers second-quarter results call for the huge sell-off in shares today. The company's revenue for the quarter jumped 29% from last year to $486 million. Meanwhile, earnings per share rocketed up 60% to $1.17. Wall Street analysts were expecting EPS of $1.12 on revenue of $470 million. Increases in profitability helped turn the strong revenue growth into even stronger profit gains, while the company's online business charged ahead.

Now what: Not only were the second-quarter results positive, but the company also boosted its full-year per-share profit outlook to a range of $3.85 to $4.05. So why in the world are shares spiraling downward? It's hard to say for sure, except that the entire market seems to be in panic mode right now and investors may be jettisoning higher-multiple growth stocks like Weight Watchers in an effort to make their portfolios more defensive.

Want to keep up to date on Weight Watchers?Add it to your watchlist.

At the time thisarticle was published Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributorMatt Koppenhefferdoes not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting hisCAPS portfolio, or you can follow Matt on Twitter@KoppTheFoolorFacebook. The Fool'sdisclosure policyprefers dividends over a sharp stick in the eye.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.