Squeeze Potential Makes Weight Watchers A Dangerous Stock To Short

News that celebrity shareholder and board member Oprah Winfrey has lost more than 40 pounds on the Weight Watchers International, Inc.WTW 8.75% plan has the stock soaring 15 percent Thursday. Winfrey promotes the plan in a brand new commercial for Weight Watchers in which she confirms her recent success on the program.

Unfortunately for Weight Watchers investors, the stock’s share price has also been on a diet in 2016. Even after Thursday morning’s move, Weight Watchers is down 48 percent this year.

The stock’s violent reaction to the Oprah news is likely in large part due to a short squeeze.

Although Weight Watchers short interest has declined 15.8 percent in the past six months, it remains extremely high. According to shortsqueeze.com, Weight Watchers currently has a huge short percent of float of 50.5 percent. The stock has more than 13.8 million shares held short with 23.8 days to cover.

Oprah’s new commercial is part of Weight Watchers new “Live Fully” campaign, which focuses on the importance of food, friends, experiences and energy in living a fulfilling life.

The timing of the new campaign is likely not a coincidence. A fresh wave of weight-related New Year’s resolutions are…

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