Shares of NutriSystem Inc. lost $680 million of their value over the last seven trading sessions on signs that the fast-growing Horsham diet company faces higher costs to gain new customers.

The biggest blow came yesterday, when the company's shares dropped more than 15 percent, or $8, to close at $44.05 in Nasdaq trading. At the end of the day, NutriSystem was worth $1.56 billion compared with $2.24 billion on Jan. 22.

NutriSystem, which sells portion-controlled prepared foods mostly over the Internet, had said Tuesday after the market closed that its first-quarter earnings would fall below analysts' expectations.

"Unseasonably higher media rates" are forcing the company to spend more on advertising to persuade customers to sign up for meal plans this year, hampering the profit outlook for the first quarter, the company said. It expects about 300,000 new customers this quarter.

NutriSystem projected first-quarter earnings per share of 82 to 86 cents, compared with 60 cents a share a year earlier, but well below the 95 cents a share predicted by analysts.

First-quarter revenue is expected to be between $200 million and $210 million, 36 percent higher than in the same period a year earlier.

Sameet Sinha, an equity analyst with Kaufman Bros. L.P., a New York brokerage, said he still expected NutriSystem's full-year revenue to increase 28 percent when compared with 2006.

"It's a question of how much management will do to get customer-acquisition costs under control," said Sinha, adding that the stock has always been controversial because of its fast growth in sales and earnings and because of its outsize stock market performance.

Even with the recent decline, NutriSystem's shares are up from less than $5 two years ago.

That momentum has attracted short-sellers - investors who borrow shares in a bet that the price will fall. When such companies disappoint, "the first reaction is shoot now and ask questions later," Sinha said.

Scott W. Devitt, an analyst with Stifel Nicolaus & Co. Inc., an investment-banking firm in Baltimore, said in a research note that NutriSystem faced tough competition and that its stock might be overvalued given the long-term risks of owning a business with high customer turnover and other factors.

NutriSystem's stock market gains in recent years have come with a great deal of volatility. In July, the shares fell nearly 20 percent in one day to $54.42 after the resignation of chief operating officer George Jankovic.

Shortly thereafter, the company spent $50 million on a share buyback, and the stock topped $75 Dec. 7.

NutriSystem's chief executive officer, Michael J. Hagan, is among the investors in Philadelphia Media Holdings L.L.C., which owns The Inquirer, the Philadelphia Daily News and Philly.com. Brian Tierney, chief executive of Philadelphia Media Holdings and publisher of the newspapers, is on NutriSystem's board.

Contact staff writer Harold Brubaker at 215-854-4651 or hbrubaker@phillynews.com.