Putting Weight Watchers' Stock Run Into Perspective

Weight Watchers International, Inc. WTW shares are having one of the strongest single-day moves in recent memory, up about 20 percent on volume that's about nine times heavier than the volume during a normal trading session.

While a number of factors have impacted the stock Wednesday, investors and traders should stay focused on something that has loomed over Weight Watchers for some time: a massive short interest.

At last check, Weight Watchers had short interest over 55 percent, an extremely high level compared against any industry.

On December 22, 2016, Weight Watchers shares rose 7 percent amid several ads which highlighted the fact that Oprah lost over 40 pounds using the company's program.

At that time, Benzinga warned of shorting Weight Watchers shares:

"With the launch of the new campaign and such a massive short position in the stock, Weight Watchers is certainly one of the most dangerous stocks to short in the market today. If a short squeeze starts gaining momentum, the rally could be quite extreme."

So What's Going On Today?

When asked about the price action Wednesday, a spokesperson from Weight Watchers pointed Benzinga to several recent events:

• An appearance by company poster woman, Oprah Winfrey, on Stephen Colbert's "The Late Show" Tuesday evening;
• Oprah on "CBS This Morning" Tuesday morning;
• Oprah on "The Rachael Ray Show" Tuesday; and
• A press release issued by Weight Watchers Wednesday morning, which announced the company was ranked No. 1 in four diet categories by US News & World Report.

Additionally, a Sidoti analyst, Frank Camma, boosted his price target on Weight Watchers shares from $25 to $28 and reiterated a Buy rating.

Putting The Price Action Into Perspective

It's important to note that while Wall Street seems to be loving the Weight Watchers media blitz this week, at least one notable comment might be getting taken out of context.

CNBC Now tweeted, "Weight Watchers rises 27% after Oprah, $WTW board member & spokeswoman, said she has lost 42.5lbs using the service.", even though Oprah already announced she had lost 40 pounds a couple of weeks ago.

Given the price action Wednesday, Weight Watchers shares are now up more than 30 percent over the last 10 trading sessions.