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WWE Posts Record-Breaking Year, But What About Subscriber Growth?

WWE Posts Record-Breaking Year, But What About Subscriber Growth?
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World Wrestling Entertainment, Inc. (NYSE: WWE) had analysts up against the ropes Thursday after pummeling earnings and revenue expectations for the fourth quarter. The company posted earnings of $0.04 a share compared to consensus of breakeven. Revenue came in at $166.2 million against $161.3 million expectations.

WWE claimed in its release that it is the fifth-largest direct-to-consumer subscription service in the U.S., behind Netflix, Inc. (NASDAQ: NFLX),, Inc. (NASDAQ: AMZN)'s Prime Video, Hulu, and MLB.TV. The company had 1.24 million paid subscribers to end the quarter, a nearly 50 percent increase from the same quarter a year before.

The company provided a hazy guidance for next quarter, expecting to add 1.25-1.35 million subscribers, but the Street may be worried the company didn't provide a firm target.

WWE noted that this year's WrestleMania fell in the second quarter, meaning it would not be able to provide a first-quarter subscriber boost like it did in 2014.

Related Link: WWE Investors: Tread Carefully, Stock Can Be 'Brutally Volatile' During Wrestlemania

Focused On Network

Macquarie analyst James Clement wrote in a note Wednesday that, "We do not think WWE is trading on revenue and earnings at this point, but instead investors are focusing on WWE Network subscriber totals." He thinks the company will need to post an average of 1.5 million subscribers for 2016.

"What will be more difficult, in our view, is to exceed the 1.6mm subs that we think is the absolutely minimum WWE needs to average about 1.5mm subs for all of 2016," Clement wrote. "The network must tap into an expanded audience and we aren't sure that'll be there one way or the other, as we don't sense WWE programming is any more popular this year than last."

WWE opened at a high of $16.45, but began to selloff as the morning went on. Shares traded recently at $14.79, down 6 percent on the day.

Latest Ratings for WWE

Jun 2016KeyBancMaintainsOverweight
Apr 2016Pacific CrestMaintainsOverweight
Apr 2016KeyBancMaintainsOverweight

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