World Wrestling Entertainment, Inc. WWE on Sunday brought WrestleMania back to New Orleans for the first time since 2014. Four years may not seem like a long time, but it likely seems like a lifetime for WWE investors, who have been on quite a ride since WrestleMania last came to the Big Easy.
The last time WWE was in New Orleans for WrestleMania XXX, the WWE Network had just launched in February. The Network launch sent WWE stock soaring to new all-time highs above $30 per share. However, subscriber numbers didn’t get off to the start the market had hoped, and a disappointing TV contract renewal with Comcast’s CMCSA’ NBC Universal sent the stock crashing to around the $10 level within weeks of the big event.
Long Road Back
Since that time WWE stock has steadily recovered, gaining steam in recent months.
In 2016, WWE and Walt Disney’s DIS ESPN announced a new WWE vertical on ESPN’s site and said ESPN would be increasing its coverage of WWE content. That same year, WWE icon Hulk Hogan was awarded $31 million in a settlement with Gawker related to the website’s release of a sex tape featuring Hogan. Hogan had been fired by WWE in 2015 for his use of racial slurs on the tape.
In 2017, former WWE president and CEO Linda McMahon was chosen by President Donald Trump to be Administrator of the Small Business Administration. McMahon, the wife of current WWE CEO Vince McMahon, has long been politically active, unsuccessfully running for Senate seats in both 2010 and 2012.
By late October 2017, WWE stock was trading back above $25 after a huge earnings beat. Earlier in the summer, WWE had reported near record-low TV ratings for its flagship “Monday Night Raw” program, but investors and analysts have now begun to look ahead to the company’s favorable positioning as one of the pioneers of the over-the-top streaming video content model.
WWE debuted “Mixed Match Challenge” on Facebook FB Watch earlier this year. In January, Variety reported that Facebook may join Comcast, Amazon.com, Inc. AMZN and Twenty-First Century Fox Inc FOXA in a bidding war for WWE’s TV rights, which are expected to expire at the end of the year.
On February 27, several Fox Sports executives attended a taping of “SmackDown Live,” fueling speculation of a potential TV deal with Fox. In January, WWE executive vice president of talent Paul “Triple H” Levesque even indicated the company is open to potential buyout offers.
Wall Street Love
The latest round of positive news and analyst commentary now has WWE stock trading near all-time highs near $38, up 32 percent overall from where it was the last time WrestleMania was held in New Orleans.
According to KeyBanc analyst Evan Wingren, WWE investors could get a clear indication of where WWE stock is headed next within a month of this year’s WrestleMania.
“WWE expects to announce the results of its U.S. TV renewal between May and September 2018, which, when announced, will likely be extrapolated for other expiring TV contracts given its importance,” Wingren said earlier this month.
CFRA analyst Tuna Amobi says WWE has plenty of room to grow its business, but the stock may have limited upside remaining after its big recent run.
"Pursuant to an ongoing multi-year direct-to-consumer transformation strategy, we see a continued focus on video monetization on TV and digital platforms (including its rapidly growing streaming channel)," Aobi said last month.
Wall Street seems optimistic at this point that the stock’s incredible run is nowhere close to over. KeyBanc upgraded WWE stock to Overweight in February following similar bullish upgrades from Morgan Stanley and Wells Fargo in January. CFRA has a Hold rating and $35 price target for the stock.
The company announced Monday afternoon that WWE Network topped 2.1 million subscribers (1.8 million paid) for WrestleMania 34. As a result, it raised Q1 AOIBDA outlook from $23 million-$27 million to $30 million.
Image credit: Megan Elice Meadows (IMG_5217) [CC BY-SA 2.0], via Wikimedia Commons
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