OPINION & ORDER This case presents a familiar narrative: when a company’s earnings plunge and the stock tanks, shareholders flock to court for recourse. But not every stock drop is the product of securities fraud. Plaintiffs bring this putative class action against Defendants WW International, Inc. (“WW” and f/k/a Weight Watchers International, Inc.), Artal Luxembourg S.A., Artal International S.C.A., Artal Group S.A. (together with Artal Luxembourg S.A., Artal International S.C.A., “Artal”), Raymond Debbane, Mindy Grossman, and Nicholas Hotchkin (collectively, “Defendants”) for violations of the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”). At bottom, Plaintiffs allege that Defendants misled investors by failing to disclose that WW’s new business model was reliant on recruiting lapsed members and that WW had abandoned its practice of releasing program innovations at the end of each year. Defendants move to dismiss the Second Amended Complaint under Federal Rules of Civil Procedure 12(b)(6) and 9(b) and the Private Securities Litigation Reform Act of 1995 (“PSLRA”), 15 U.S.C. §78u-4(b). For the reasons that follow, Defendants’ motion to dismiss is granted. BACKGROUND Unless otherwise noted, the following facts are derived from the Plaintiffs’ Second Amended Complaint and are accepted as true for purposes of this motion. I. The Parties Plaintiffs purchased shares in Weight Watchers (now known as “WW), a publicly-traded company. Mindy Grossman is the President and CEO of Weight Watchers, and Nicholas Hotchkin serves as its CFO. Raymond Debbane — the CEO of Artal — chairs Weight Watchers’ board of directors. Artal has owned a major stake in Weight Watchers’ from September 1999 until it divested a significant portion of its Weight Watchers stock in 2018. II. WW Overview Weight Watchers was founded in 1961 as a weight-loss program. (Second Consolidated Amended Class Action Complaint, ECF No. 86 (“SAC”), 47.) When Jean Nidetch founded the company, she “invited friends to her home in Queens to discuss the best ways to lose weight.” (SAC 47.) Weight Watchers expanded this in-person weight loss meeting model to millions of members around the globe. (SAC 47.) To monetize these meetings, members would pay a fee to attend and receive guides on how to lose weight. (SAC
47, 49.) More recently, Weight Watchers has capitalized on the internet by offering a suite of online programs, including workshops and products for additional fees. (SAC 47.) Weight Watchers also added a “points” system to aid subscribers in tracking what they eat. (SAC 48.) That system assigned specific point values to different foods, which allowed members to budget calories. (SAC 6.) Historically, Weight Watchers’ “‘bread and butter’ customers consisted of middle-aged, white women.” (SAC 47.) A significant proportion of WW’s new subscriptions come from people who had previously subscribed to the program but allowed their memberships to lapse. (SAC 55.) Weight Watchers also relied principally on a seasonal model. (See SAC
