How was your Monday? Oprah Winfrey's was better. Here's what happened.
Over the weekend it was announced that Winfrey was acquiring 10 percent of publicly traded Weight Watchers International Inc. She's also becoming a member of the company's board and will star in advertisements.
Thus, when trading opened on Monday, she made a fortune.
As The Wall Street Journal explains, Winfrey had taken a 10 percent stake in the company, "agreeing to buy 6.4 million shares ... for $43.2 million, and collecting an additional 3.5 million stock options."
On Monday, the stock skyrocketed. By noon, the Journal was reporting she'd cleared $50 million, but things weren't done yet. By the closing bell, the stock had more than doubled, closing at $13.92.
So let's do a little math. Oprah bought in at $6.75 per share, and by 4 p.m. her stake had increased in value by $46.8 million. On top of that, we have to add the value of her options -- which she can exercise at $24.4 million but are now worth another $48.7 million -- for an additional profit of $24.3 million. Add it all up and her profit from just one day of trading was $71.1 million.
(Keep in mind -- that's her profit from just this one deal.)
There are a lot of reasons why the arrangement makes sense for Weight Watchers. For one, the company's value had tanked prior to Oprah's involvement. For another, its most successful advertising campaigns in the past have all involved celebrities --including a member of the royal family.
Winfrey is a natural fit. As the Journal reminds:
"It isn't the first time Ms. Winfrey has been involved with a diet or weight-loss brand. In 1988, she showed off her 67-pound weight loss by treating her viewers to a twirl in her size 10 Calvin Klein jeans. She repeatedly mentioned her prescription liquid-diet, the Optifast Program. That day, a million people tried to telephone Optifast, and sales of nonprescription liquid diets soared. But by 1990, Ms. Winfrey had regained much of the weight and denounced liquid diets on the air, hurting the sales of some liquid-diet products.
Ms. Winfrey is widely credited with sparking a second running participation boom in the U.S. after she ran the 1994 Marine Corps Marathon."
If there's a lesson here, it's one we've learned many times. Let's put it in perspective. Suppose you make a really great salary working for someone else -- $350,000 a year, for example. Add benefits, and your total take comes to maybe $455,000. Assume there are 220 workdays in a year -- and your daily take is just over $2,000 -- or only $70.998 million less than Oprah made on Monday.
Yes, I know. She's Oprah. She's a multibillionaire, and to her $71 million is a rounding error. That's sort of the point. The best way to make money is always -- always -- to believe in yourself and build something great.