Market Overview

WWE Has Monster Run, But Could It Soon Be Slammed?

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World Wrestling Entertainment (NYSE: WWE) has been a stellar performer in 2014. After ending 2013 at $16.58, WWE was nearly up 100 percent when it peaked at $31.98 in March.

Since peaking at the level, WWE has retreated to the $28.00 level, which still puts it up 70 percent for the year. When compared to minimal gain in the broad market, this makes the move all the more impressive.

Besides profit-taking, another reason for the decline from the highs may be attributed to an article on Seeking Alpha published on March 17.

Related: What Is The Markets Opinion On GM And Mary Barra's Testimony?

The author believes WWE may be severely overvalued. The basic premise being that the financial performance has been trending down for multiple years and that excessive dividends and losses may potentially erode its financial profile. The author believes the execution by the management has been sub-par and consistently underdelivers.

Although the market did not immediately react to the article, it has declined from its March 17 close ($30.37) to its current level. That, coupled with some profit-taking from its monster run, may account for the decline from the all-time high.

Ten days after the article was published, WWE bottomed at $26.28 and then rebounded to $30.39 on April 1. However, it was not able to close above the key psychological level of $30.00 on that day and has already given back a majority of the gains from the recent rally.

For now, WWE may be heading back to its recent low at $26.20, which coincides with its March 5 low ($25.88). If it is unable to hold that level, it could quickly tumble another three points until its March 4 low ($23.55).

Bulls are hoping for a return to $30.00 level and series of closes above it. If that takes place, WWE may gather enough momentum to return to its all-time high and beyond.

Posted-In: Seeking Alpha World Wrestling EntertainmentLong Ideas Short Ideas Technicals Markets Trading Ideas Best of Benzinga

 

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