WrestleMania Exceeded Even PacCrest's Expectations: WWE Worth $20/Share

Pacific Crest’s Evan Wingren mentioned that while the total demand for WrestleMania beat the estimates, churn was likely to lead to a decline in paid subscribers in Q2.

The analyst maintained an Overweight rating on World Wrestling Entertainment, Inc. WWE, while lowering the price target from $22 to $20.

“Despite lower near-term subscribers, we recommend owning WWE for its leadership in navigating the shift to on-demand, strong demand for its content and dominant position across multiple platforms,” Wingren stated.

WrestleMania Demand

The company reported 1.82 million subscribers following WrestleMania, ahead of the estimate of 1.70-1.80 subscribers.

Globally, 1.45 million subscribers had paid for WrestleMania, while another 370,000 watched the event as trial subscribers.

Trial subscribers were also higher than expected, while search volumes were high on Sunday, April 3.

However, management indicated Q2 paid subscriber range at 1.48-1.55 million, below the previous estimate of 1.6 million paid subscribers at the end of Q2. The Q2 end paid subscriber estimate was lowered to 1.43 million.

Q2 Churn

“Although we accurately gauged overall demand for WrestleMania, we likely underestimated the magnitude of churn on free trial subscribers,” Wingren pointed out.

The analyst also noted that the Q2 subscriber range provided by World Wrestling Entertainment did not include any benefits from the addition of content to the network.

“Our base case assumes 10 percent net decline of current paid global subscribers, conversion of one-third of U.S. trial subscribers and conversion of one-fourth of international trial subscribers,” Wingren added.