Financial Poise
Investing in weight loss

Investing in Weight Loss Companies May Bring Big Gains

The Obesity Epidemic and Digital Weight Loss Platforms Bring Opportunities to Investors

Keto. Intermittent Fasting. FitBit. Peloton. You’ve probably heard these words thrown around daily—especially at this time of year.

With the new year finally here, it is pretty much accepted as canon that weight loss resolutions must be made. That makes investing in weight loss companies a potentially lucrative resolution in and of itself. Weight-related resolutions often top the list for Americans, right next to saving more money or quitting smoking. With free gym membership incentives, free trials from food service companies, free supplement samples and free tracker apps, the surge of new health-oriented consumers each January and February may mean a surge in stock prices as well.

The Weight Loss Industry Today

The CDC reports that between 1999 and 2018, the prevalence of obesity increased from 30.5% to 42.4%. While obesity costs the U.S. billions in dollars annually in medical costs, entrepreneurs and weight loss companies profit from the 45 million people who go on special diets each year. Today, the weight loss market is worth $72 billion.

If you haven’t yet considered investing in weight loss companies, there are plenty available to choose from. While they each experience the ebbs and flows of the market, there is no doubt that the wellness industry is booming.

The vast span of weight loss services and products includes:

  • Diet pills and food supplements
  • In-person and digital meal plan services
  • In-person and digital exercise plan services
  • In-home fitness equipment, including those with virtual workout programs
  • Calorie and fitness trackers
  • Diet shakes, nutrition bars and other meal replacements
  • “Clean” eating meals and entrees

Between household names like WW International (a.k.a. Weight Watchers) and Nutrisystem are emerging options, such as food delivery companies Seamless and Blue Apron, and wellness apps like MyFitnessPal for consumers to use—each looking for investors to take a bite.

New Trends: The Digital Takeover and DIY Fitness

The industry is saturated with options, but there are trends that can help you to better understand where the industry is headed and weed out the weakest players. Today’s consumers, for example, are abandoning brick-and-mortar weight loss centers and OTC pills for virtual services and cleaner, natural diet options that support body positivity.

At-Home Wellness and the App Domination

The pace of change of technology has disrupted much of the wellness industry. Throw in a global pandemic, and most Americans are living their lives on Zoom and in virtual spaces. This has created a boom in weight loss apps and virtual services, which has become a $1.4 billion industry in and of itself. Digital weight loss companies offer consumers personalized programs and information that can be accessed on and off-line. If you’re looking to invest in weight loss companies, then the digital sphere is a good place to research.

CNN Business reports that MIRROR, a company that sells full-length mirrors programmed with interactive fitness programs, and Obé, an online-only fitness service, have seen their sales boom. MIRROR CEO, Brynn Putnam told CNN Business that sales had more than doubled—despite brick-and-mortar locations being shut down—and the co-founders of Obé added kids content to their 4,000+ on-demand classes to seize on the increase in membership from families stuck at home.

Industry veterans, such as WW, have taken notice of the shift and made major changes to their business model. Started in 1963 as Weight Watchers, WW became famous for its food-tracking points system and weekly in-person weigh-ins. Now, WW has gone digital and embraced holistic wellness over simple dieting. WW CEO Mindy Grossman states, “But now we are really a technology experience company with a human-centric overlay, aiming to have as significant an impact as we can.” The company invested in technology built around customization and personalization in November 2019 and now offers personalized plans through its myWW programs in addition to its in-person services.

Investors have their eyes on these digital weight loss companies, including Noom, an app that asks users questions to match them with a personalized weight loss plan and a virtual coach. The app has increased its revenues from $12 million in 2017 to $237 million by 2020. Investors have invested more than $114 million in capital to the company, and its future is keeping potential investors interested.

There is a Buffet of Options for Investing in Weight Loss Companies

Many weight loss companies are publicly traded companies, but if a company exists and operates outside the NYSE—as many of them do—it’s a little harder to pin down exactly what’s making them successful in terms of investing, allocation, growth, valuation, forecasting and the causes of their success. Talk to a financial advisor to see what’s going on in the weight loss and wellness industries, and do your homework before deciding. The good news is, being in peak physical condition isn’t a factor for success in this type of investment.

If investing in weight loss companies feels like the way to go, the new year is the best time, statistically speaking. Although, almost any time of year isn’t “bad” per se, thanks to bathing suit season, holiday emotional fluctuations, spring break and the like. With the American obesity epidemic in a consistently upward trend, solutions to a healthier, longer or better life are endlessly sought, and companies are eager to be part of finding them.

If you are what you eat, as the saying goes, then perhaps it is even more true, in terms of investing in weight loss companies, to put your money where your mouth is.

[Editor’s Note: To learn more about this and related topics, you may want to attend the following webinars: Personal Finance & Investing Fundamentals 1.0 and Personal Finance & Investing Fundamentals 2.0. This is an updated version of an article originally published on January 5, 2018.]

©All Rights Reserved. January, 2021.  DailyDACTM, LLC d/b/a/ Financial PoiseTM

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